German economic growth could be hurt for quite some time by financial market turmoil, European Central Bank Executive Board member Juergen Stark said in a newspaper interview to be published on Sunday. Stark's warnings that "shock waves" from the United States could hit growth in Europe's largest economy followed a Der Spiegel news magazine report that the government will slash its 2009 growth forecast to about 0.5 percent from 1.2 percent.
"Depending on how the shock waves from the United States hit us, we'll be seeing weaker growth rates in Germany over a longer period of time," Stark told Welt am Sonntag newspaper. "After strong growth rates at the beginning of the year and a correction in the second quarter, we'll probably see very weak data in the third quarter," he added. "It's difficult at the moment to estimate how the developments of the last few days will affect confidence from investors and private households."
According to a report to be published on Monday in Der Spiegel, the government expects 2009 growth to slow to about 0.5 percent, down from a previous target of 1.2 percent, due to market turmoil.
The magazine said Economy Minister Michael Glos expects growth of only about 0.5 percent in 2009. It is expecting economic growth of 1.7 percent in 2008. The economy ministry said it had no comment on the report. A spokesman said any update in the government's growth forecasts would be published in October after the next scheduled review.
"Due to the turbulence on the world financial markets and the economic weakening, the government will sharply correct downward its growth forecast for next year," the magazine said. "Instead of 1.2 percent, Economy Minister Michael Glos's experts now reckon with growth of about 0.5 percent."
Peter Bofinger, a member of the government's council of economic adveven more sceptical. "I consider it possible that we'll have stagnation next year," Bofinger was quoted saying in Der Spiegel. Chancellor Angela Merkel told parliament this week the impact of global market turmoil on Germany has been moderate.
Merkel's comments were echoed by Finance Minister Peer Steinbrueck, who said growth was nevertheless likely to be weaker than expected next year due to market developments. Steinbrueck said growth next year of between 1.0 and 1.2 percent was "realistic".
Earlier on Saturday, the president of the BDI industry association Juergen Thumann said Germany's economy was in good shape despite dire warnings from some analysts, and growth of even 2 percent was possible this year. "The situation in Germany is much better than it is being described by the many 'wannabe' experts," Thumann said in remarks released by the newspaper Bild am Sonntag in an advance of its publication on Sunday. "I continue to believe that growth of 2 percent this year is possible," he said.