Germany's economic recovery has come to a standstill, the country's six leading research institutes said on Tuesday, saying they have halved their 2005 German growth forecast to 0.7 percent from 1.5 percent. In their semi-annual report on the health of Europe's largest economy, the institutes also said they saw no coherent concept to tackle Germany's economic woes and without further reforms potential growth would remain low.
"The German economy is currently in a weak spot. The recovery which had been remarkably strong in the first half of 2004 came to a standstill," the institutes wrote. "(The) latest sentiment indicators suggest that the economy may still have to find bottom; business expectations continue to point down."
The institutes said the German economy, after growing 1.6 percent in 2004, its fastest rate since 2000, would expand in 2005 by 0.7 percent.
Adjusted for differences in working days, growth this year would be 0.9 percent, down from 1.0 percent in 2004, they said.
They pinned much of the blame on high oil prices sapping corporate profits and consumer spending power.
Assuming oil prices ease and world trade remains buoyant, the economy should accelerate in the second half and grow 1.5 percent in 2006 - surpassing Germany's trend rate of growth, estimated by the institutes at around one percent.