The German economy could grow by 3 per cent this year, the Economics Minister, Mr Guenther Rexrodt, has stated. Growth "would come in around 3 per cent" if the Asian crisis is effectively dealt with, Mr Rexrodt said. Investment would rise and "for the first time, consumer demand will increase again", he said. The German government's own outlook was for growth of between 2.5 per cent and 3per cent.

Mr Rexrodt also said there was a good chance of a breakthrough on Germany's troubled labour market. "We will have fewer jobless in 1998 than we did at the end of 1997," he said. Unemployment had stopped rising and was falling in west Germany, he said, because of a "reasonable level of economic growth" and the positive effects of the reform of the social welfare system.