German government cuts 2013 growth forecast
BERLIN (AP) — Europe's debt crisis and waning economic growth around the world, particularly in emerging markets, prompted the German government to cut its forecast for growth next year.
Though the country's Economy Ministry cut its growth forecast for 2013 to 1 percent from 1.6 percent, it sought to reassure anyone fearing that Europe's largest economy was heading into an economic crisis. Wednesday's revised outlook puts the government in line with other recent forecasts.
Despite downgrading its 2013 forecast, the ministry increased this year's outlook slightly from the 0.7 percent it predicted in April to 0.8 percent.
Germany's economy, which was worth a little under €2.6 trillion ($3.4 trillion) last year, in comparison with the U.S.'s €12 trillion, has seen two consecutive years of robust growth. Its economy expanded by 4.2 percent in 2010 and 3 percent last year.
However, it has lost momentum as the debt troubles on its doorstep have weighed on economic confidence.
Nonetheless, its continued growth stands in sharp contrast with the recessions hitting many of its euro partners, such as Spain, Greece and Portugal.
Economy Minister Philipp Roesler, who is also the vice chancellor, said indicators point to "further moderate growth" in the third quarter after the year's first half went better than expected. Third-quarter GDP figures are expected Nov. 15.
After a slacker winter, Roesler said there are signs the global economy could pick up speed next year, helping Germany. Exports are a traditional German strength.
Given the less rosy economic outlook, labor union officials are arguing that the government needs to consider some kind of new economic stimulus. On Wednesday, Berthold Huber, the head of the IG Metall industrial union, told the Bild newspaper that Germany needs a "crisis protection program" that would involve spending on education and energy efficiency.
Roesler dismissed such talk.
"We are still talking about growth ... emphatically not about a crisis," he told reporters. "It remains the case that, if one terrible day we face a major crisis, we would of course be in a position to launch the necessary arrangements very quickly — but there is absolutely no sign of this terrible day."