German government and institutes to trim growth forecasts

Germany's government and six leading economic think tanks will next week trim their forecasts for German growth this year, German media reported on Saturday.
Bild newspaper said the institutes would cut their forecast to 1.4 percent from 1.7 percent when they publish their semi-annual forecasts on Tuesday, while Spiegel magazine said the institutes and government experts now reckoned on growth of 1.5 percent.
An economy ministry spokeswoman declined to comment on the reports, saying the government would present its latest economic outlook on Friday, after the institutes have issued their semi-annual report on Tuesday.
Despite a raft of disappointing economic data, the government has so far maintained a forecast for growth this year of between 1.5 and 2.0 percent, although has used 1.7 percent for budgetary planning purposes.
The institutes' individual forecasts currently range from 1.4 percent to 1.8 percent.
In an interview released ahead of publication on Sunday, Bild am Sonntag newspaper quoted Economy Minister Wolfgang Clement as saying first-quarter growth had been disappointing.
"The first quarter has clearly fallen short of our expectations," Clement was quoted as saying.
Germany's central bank said last week Europe's largest economy, which shrank slightly in 2003, probably grew a quarter of a percent in the first three months of the year compared with the fourth quarter.
However, Clement told Bild that the mood in manufacturing industry had brightened since the start of the year, citing brisk business at the annual Hanover engineering trade fair.
His comment was lent support by a statement from Germany's ZVEI electrical engineering association on Saturday on the results of the fair.
"Whereas at the start of the fair the majority of companies saw the economic outlook about the same as last year, at the end of the show, three out of four were more upbeat on the outlook," ZVEI was quoted by the fair organisers as saying.
According to Spiegel, the six institutes would forecast Germany's economy will grow by less than two percent in 2005.
The government's aim to reduce its budget deficit below three percent of gross domestic product in 2005 and comply with European Union rules is based on the assumption the economy will grow around 2.25 percent next year.