German growth forecast to slow

German economic institute IMK cut its 2008 growth forecast today to 1.5 per cent from 1.9 per cent previously.

German economic institute IMK cut its 2008 growth forecast today to 1.5 per cent from 1.9 per cent previously.

The IMK forecast the economy would grow by 2.6 per cent this year. The IMK contributes to joint forecasts prepared for the German government by think tanks including Munich's Ifo and the Kiel-based IfW.

The IMK's forecast for growth next year is slightly less upbeat than that expected by the Munich-based Ifo economic research institute, which expects growth of 1.8 per cent. The Bundesbank predicts growth of 1.6 per cent.

The IMK also said export growth should slow next year as economic activity in the United States and the euro zone cooled, and the impact of the strong euro bit.

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Austria's Wifo think tank predicted growth of 1.8 per cent next year. It said a tentative pick-up in household spending would fail to compensate for slowing export growth and weaker investment in Germany next year.

Recent economic indicators have pointed to a slowdown in the German economy. Ifo's latest business climate survey, published yesterday, showed German corporate sentiment worsened in December to its weakest level since January 2006.