Germany's economy should grow by 1.7 per cent in 2004, ending three years of stagnation, but the modest recovery will be brief if the dollar falls, the country's six leading economic think tanks said today.
"The institutes forecast the economy will stagnate this year and that next year there will be a modest recovery," Ifo institute economist Mr Gebhard Flaig told a news conference to present the institutes' semi-annual report.
"One can't really talk about an upswing," he added. Europe's largest economy is emerging from its second recession in as many years. The Bundesbank said yesterday the economy probably expanded for the first time in a year in the third quarter.
As expected the institutes cut their 2003 growth forecast to zero from 0.5 per cent and said they expected growth next year of 1.7 per cent, compared with a 1.8 per cent forecast made in April.
The forecasts came two days before the government was due to present its revised economic forecasts. Berlin currently sees growth of 0.75 per cent this year and 2 per cent in 2004.
German Chancellor Gerhard Schroeder told the country's BDI industry federation he was sceptical the institutes' forecast of 1.7 per cent for next year could be exceeded and Economy Minister Wolfgang Clement said he agreed with it.