Tags: Germany | economy | Schaeuble | finance

Schaeuble Says German 2014 Growth May Miss Forecast Amid Crises

Thursday, 04 Sep 2014 10:45 AM

Germany’s economic growth may fall short of the government’s forecast this year, Finance Minister Wolfgang Schaeuble was quoted as telling lawmakers, as crises from Ukraine to Iraq sap business confidence.

Growth could end up at less than the 1.8 percent forecast in April, Volker Kauder, the caucus leader of Chancellor Angela Merkel’s Christian Democrats, cited Schaeuble as saying Thursday at a closed meeting in Berlin that both attended.

Europe’s largest economy shrank in the second quarter and German business confidence declined for a fourth month in August amid European Union sanctions on Russia. Hours after Schaeuble’s warning, the European Central Bank in Frankfurt cut interest rates and said it plans to buy asset-backed debt.

Schaeuble “said he did have to point out that the envisaged growth target of 1.8 percent might not quite be reached,” Kauder told reporters.

The HWWI economic institute cut its 2014 growth forecast for Germany to 1.6 percent Thursday from 2.2 percent in June, citing “low dynamism” in the euro-region economy and uncertainty related to Ukraine and the Middle East.

Growth will accelerate to 2 percent in 2015, the Hamburg- based HWWI said, matching the government’s current forecast that forms the basis for its balanced 2015 budget plan.

Even as the economic outlooks clouds over, Merkel’s government still plans to reduce new borrowing to zero by next year, Schaeuble and Christian Democrat budget policy spokesman Norbert Barthle said in a statement. Fiscal leeway is “limited,” they said.

Rising Revenue

Tax revenue at all levels of government rose 2.6 percent in the first seven months compared with the same year-earlier period, the Finance Ministry said in its monthly report published Aug. 22. That compares with a full-year target of 3.4 percent as predicted by an independent tax panel.

The economy’s trend is “still positive” after gross domestic product contracted 0.2 percent in the second quarter and the slowdown may only be temporary if “the Ukraine crisis doesn’t intensify further and sanctions aren’t massively increased,” the ministry said. German GDP grew 0.7 percent in the first quarter.


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Economy
Germany's economic growth may fall short of the government's forecast this year, Finance Minister Wolfgang Schaeuble was quoted as telling lawmakers, as crises from Ukraine to Iraq sap business confidence.
Germany, economy, Schaeuble, finance
339
2014-45-04
Thursday, 04 Sep 2014 10:45 AM
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