IMF cuts growth projects, says Germany is underperforming; Lufthansa could be heading for more losses and German companies hoping for contracts in postwar Iraq.
The Asian flu-like disease SARS has had Lufthansa reeling.
IMF Forecast Bleak for Germany
The International Monetary Fund has slashed its global economic forecast for this year by a half-percent. In its semi-annual report, the body said high oil prices at the start of this year were undermining economic activity. The IMF also predicts the German economy will remain stagnant. The IMF blames slow growth in Germany for the tepid GDP growth
it's forecasting for all of Europe. "The IMF foresees a meager half percent GDP growth for Germany this year," said Kenneth Rogoff, the IMF's chief economist. "That's a long way below the rest of the euro zone." But recovery could come as early as 2004. The organization predicts Germany's economy could bounce back to growth of 1.9 percent next year. But that
still underperforms the 2.3 percent the IMF is forecasting for the euro zone.
Is Lufthansa heading for another crisis?
In the face of the mysterious SARS pneumonia and the Iraq war, an official at German flagship airline Lufthansa cautioned Thursday that the company could be heading into a crisis. Vice President Wolfgang Mayrhuber said the company expects a deep first-quarter operating loss in 2003. Analysts say the loss could be as high as €350 million ($378 million) "Despite the fact Lufthansa returned to profitability in 2002, even paid taxes and paid-off a substantial amount of its debt, we are now back for a roller coaster ride. Things are going downhill, and we'll have to adapt," he said. That could means cut costs, the introduction of temporary jobs, the cancellation of flights and the grounding of more planes.
German industry hoping for involvement in postwar Iraq
The head of Germany's biggest industrial association said he hopes the U.N. will play a central role in rebuilding postwar Iraq. Michael Rogoswki, who heads the BND, said German industry supports Chancellor Gerhard Schröder's stance and hopes to take part in some of the rebuilding projects.
As seen through the windshield of a press bus, an Iraqi woman walks with a child across an otherwise empty square downtown Baghdad, Monday, April 7, 2003. U.S. troops seized key buildings in the heart of Baghdad on Monday, including a major presidential palace on the Tigris river.
Rebuilding the damage and destruction done by more than 20 years of neglect and a few short weeks of war will cost $80 billion (€74 billion) according to some estimates. "Made in Germany has a good reputation in Iraq and the rest of the Arab world," said Rogowski to the wire service AP. "Germany had good contacts to Iraqi companies before the U.N. sanctions that can be renewed again today." Though only 0.06 percent of total German exports in 2002, exports to Iraq ranked Germany behind only France, Russia and some Arab countries in Iraq's list of trading partners. Lining up contracts will prove to be difficult though. U.S. companies are reportedly first in line and have already won $2 billion worth of contracts, according to the government organization USAID.
Compiled with information from wire services