Germany to Boost 2007 Economic Forecast

Posted 24 December 2006 @ 04:58 pm EET     Print     Reprint     E-Mail     Comments

BERLIN (AP) - The German government plans to hike its growth forecast for 2007, Economy Minister Michael Glos has said, saying the mood had not been this optimistic since the country reunified in 1990.

"I am counting on that fact that we will again raise the official economic growth forecast of 1.4 percent for 2007 in January," Glos said in a guest column for the mass-selling Bild am Sonntag newspaper. "The mood has not been this good since reunification."

He did not specify what the new growth forecast would be. Glos, a member of Chancellor Angela Merkel's conservative bloc, attributed the sunnier outlook to moderate sector-wide wage agreements and "new corporate strategies".

He added Sudnay that government economic reforms had also improved German competitiveness and called for further measures including lower electricity prices and mobile phone roaming charges.

"The state must also economize in 2007," he said, adding that tax increases being introduced January 1 including a hike in the value-added tax to 19 percent from 16 percent must be a one-off measure.

The German economy is on track to run up its strongest performance since 2000 this year, with exports booming and long-slumbering domestic demand also finally picking up.

Both the Organisation for Economic Cooperation and Development in Paris and the International Monetary Fund in Washington recently gave the German economy a clean bill of health, forecasting growth of around 2.5 to 2.6 percent this year and 1.5 to 1.8 percent next year. Unemployment has fallen back below the psychologically important level of four million and now stands at its lowest level since October 2002.