Germany's DIW research institute warned of recession in Europe's largest economy today while other top think-tanks weighed in with gloomy predictions about German growth prospects.
"There is a danger of recession. We can't be sure that it is only a temporary economic downturn," Mr Klaus Zimmermann, president of the influential DIW economic research institute, told a news conference in Berlin today.
The DIW chief's warning of a possible recession was only the latest pessimistic prognosis in what has been a black week for Germany's economic prospects, although some economists did hold out the prospect of an upturn next year.
The IWH research institute in Halle said it expected the German economy to grow 1.7 per cent in 2001, below the government's forecast for two per cent growth this year.
On Monday, the Hamburg-based HWWA cut its forecast for German growth in 2001 to 1.7 per cent, while the Kiel Institute for World Economics (IfW) also revised its growth prediction down to 1.3 per cent this year from 2.1 per cent.
All three are among the six leading institutes which advise the German government on the economy and which in March made a combined forecast of 2.1 per cent growth for 2001.
The recent spate of downward revisions have been driven by stagnating industrial output, thinning order books and lengthening dole queues.
HWWA president Mr Thomas Straubhaar told Die Weltdaily he did not expect euro-zone growth to register the same kind of decline as the United States and called on the ECB to hold off on future monetary policy moves.
"What didn't rise by much can't fall by as much. After a year of records, it's time for some
average fare. There is no sign of a recession," Mr Straubhaar said.
"There is a sense that the ECB has allowed itself to become infected by the prevailing impatience. Since April 1999 it has acted in a hasty staccato way," Mr Straubhaar said.
"In particular, the unnecessary interest rate cut on May 10th, which came without warning, did not win the bank the stature and respect it had hoped for," he said.