The European Commission believes Germany is unlikely to meet its 1.5 per cent growth forecast for next year, a German newspaper reported today, and it expects Finance Minister Mr Hans Eichel to cut the forecast next month.
The report in the Handelsblatt daily comes one day after Economic Affairs Commissioner Mr Pedro Solbes said the Commission may trim its forecast for overall euro zone growth for this year because of the sluggish performance of the German economy.
Germany, which accounts for 40 per cent of the 12-nation euro zone economy, is struggling to stay out of a mild recession that it slipped into late last year and weak growth has hit tax receipts and forced Berlin to slash spending and raise taxes.
Citing sources, Handelsblatt said the Commission may revise its own forecast of 1.4 per cent for German growth next year. "It cannot be ruled out that we will revise this figure in our spring forecasts," the source said, adding that something in the region of 1.0 per cent growth was more likely.
"We are looking forward to seeing what figure Finance Minister Eichel presents in his annual economic report at the end of January," the source said.
The German Finance Ministry could not be reached for comment on the report.
Solbes said in an interview with Spanish financial television station Expansion yesterday: "This 0.8 per cent (growth forecast for 2002), given the evolution of the German economy... could be revised slightly downwards."
But he affirmed the commission thought its 1.8 per cent growth forecast for the zone next year was still valid.