Germany’s prominent industry lobby slashed the country’s economic growth forecast for 2014, arguing that geopolitical crises in Iraq, Ukraine and the Middle East were fuelling uncertainty for businesses, reported local newspaper yesterday.
Sueddeutsche Zeitung reported that the BDI industry group lowered its 2014 economic growth estimate to around 1.5 percent from its earlier forecast of 2 percent.
“Companies are feeling the headwinds. Uncertainty is increasing,” BDI president Ulrich Grillo told the paper. Grillo noted that while sanctions on Russia were necessary, they were negatively impacting German businesses with operations there.
Germany’s economy, which had a strong start in the first quarter due to the favorable winter weather that boosted construction, declined 0.2 percent in the second quarter, spurring some analysts to express concern over the risk of a recession.
While some reports have indicated that business confidence dropped and private sector expansion fell, latest data shows positive prospects: trade surplus, industrial orders and output all jumped in July.
Last week, the Organization for Economic Cooperation and Development reduced its 2014 growth forecast for Germany to 1.5 percent from its previous estimate of 1.9 percent set in May.
German policy makers expect the economy to grow by 1.8 percent this year, though Finance Minister Wolfgang Schauble fears the target may not be attained.
Meanwhile, China has no plans to change its economic policy just because of a single economic indicator, said Finance Minister Lou Jiwei on Sunday.
Jiwei spoke after a gathering of central bank governors and finance ministers from G20 nations in Australia. The comments came after Chinese total social financing aggregate, the widest gauge of lending in the country’s economy; fell to its lowest level in almost six years, according to a report released earlier this month, showing that credit levels are less than average. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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