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Germany expected to cut economic growth forecast

The German government on Saturday downplayed as only “speculation” a report in a German weekly that Europe’s biggest economy would slash its growth forecast for next year to 0.5 percent from the previous 1.2 percent estimate.

“There is not yet an official forecast. It is only speculation,” an economy ministry spokesman said in commenting on a Der Spiegel report, which cited ministry experts.

The government will publish its next economic forecasts on Oct. 16.

WEAKER

Meanwhile, European Central Bank chief economist Juergen Stark said that Germany would go through “a period of weaker economic growth, the duration of which will depend on the extent of the repercussions from the [financial] shockwave coming from the United States,” he said in an interview to appear in yesterday’s newspaper Welt am Sonntag.

Stark said, however, that he did not see “any potential for a recession,” either in Germany or in the global economy, nor any signs of deflation in the eurozone.

‘DIFFICULT’

Last month, German Economy Minister Michael Glos said he could not rule out revising down the economic growth forecast for next year, given the current “difficult” situation, as Germans said they were more pessimistic about the health of their economy.

OPTIMISM

Nevertheless, on Friday the government maintained its estimate of 1.7 percent economic growth this year, despite the doubts of many economists who point to a slowdown in exports and higher inflation.

The head of the German Industrial Federation, Juergen Thuman, said in an interview with the Rheinpfalz am Sonntag that for the moment the financial crisis had not caused any serious problems for the German economy.

But he warned that this could change.

“Germany is strong … I continue to think that it is possible to achieve economic growth of two to three percent this year,” he told the Bild am Sonntag.
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