Kiel Institute Raises German Growth Forecast

The respected IfW economic institute, based in Kiel, has raised its forecast for German growth this year to 1.8 percent from its 1.5 percent estimate in April. Economists there said faster-than-expected growth in exports was the reason behind the new estimate. Strong global growth, led by the U.S. and Asia, has been the sole driving force behind Germany's economic recovery since consumer demand is weak and unemployment high. Kiel economists predicted that domestic demand would increase slightly, but not as analysts thought this spring. The institute has also predicted growth will slow to 1.3 percent next year, however, as still-weak consumer spending fails to offset an expected cooling off of the global economy. Another economics think tank, Essen-based RWI, said it may also raise its 2004 forecasts "toward 1.8 percent."