Thursday Oct 11, 201204:56 PM GMT
Leading German economic think tanks warn of recession
Economists warn Germany about falling growth and possible fall into recession.
Economists warn Germany about falling growth and possible fall into recession.
Thu Oct 11, 2012 4:56PM
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Germany’s leading economists have cut growth estimates for Europe's top economy, warning that the country is in great danger and could fall into recession.


Economists from four institutes across Germany -- Ifo in Munich, IfW in Kiel, IW in Halle and RWI in Essen-- have slashed growth forecasts for next year in half.

“Should the situation in the Eurozone continue to deteriorate, this will also impact the German economy. Over the forecasting period as a whole the downside risks prevail and there is a great danger that Germany will fall into a recession,” the institutes warned in a joint report on Thursday.

The economic think tanks have also warned that the policies adopted by the European Central Bank (ECB) are fueling inflation in the 17 countries that share the euro.

“In the longer term, there is a great danger that the ECB will continue to purchase bonds and provide excessive monetary policy stimulation even if states deviate from the adjustment programs, which could drive up prices and lead to an increase in inflation expectations,” the report added.

The Munich-based Ifo economic institute had earlier reported that Germany’s business confidence has fallen to the lowest level since February 2010.

The Ifo report noted that its business climate index for Germany fell to 101.4 in September from 102.3 in August, that is the lowest rate for a fifth consecutive month.

The latest figures indicate that even Europe’s biggest economy is not immune to the economic crisis in the eurozone.

TNP/JR/SS
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