Berlin cuts GDP growth forecast

Germany has halved its economic growth forecast for 2019, but Economy Minister spoke of a "wake-up call".

Deutsche Wirtschaft
dpa

Berlin (dpa) - The German government has cut its growth forecast in half for gross domestic product (GDP) in 2019, from 1 per cent to 0.5 per cent.

Announcing the cut, Economy Minister Peter Altmaier spoke on Wednesday in Berlin of a "wake-up call," saying that politicians need to think about how to stimulate growth in Europe's largest economy.

Altmaier advocated relief on taxes, fees and bureaucracy. He also proposed a moratorium on measures that put pressure on the economy.

The main reason for the weaker forecast is a slowdown in the global economy, as well as global trade conflicts - such as between the United States and China, and the US and the European Union - which hit Germany's export-heavy economy hard.

In addition, German companies have been holding back on investments in machinery and equipment, Altmaier said.

The minister expects the German economy to revive in the second half of the year. For 2020, he expects growth of 1.5 per cent.

Altmaier said that he was in favour of cutting corporate taxes and that there was room for manoeuvre in the federal budget to facilitate this.

However, Finance Minister Olaf Scholz has spoken out against tax cuts, saying Germany should not take part in an international tax race to the bottom.

Altmaier said he wanted to go to his cabinet colleagues after the Easter break to lobby for relief for companies and citizens.

Leading economists had also lowered their GDP growth forecast forecast for Germany to 0.8 per cent for 2019, meaning the government is a bit more pessimistic.