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Business Briefs

Compiled with information from wire services.June 12, 2003

ECB slashes 2003 growth forecast; German exports fall in April; Franco-German deal seen on EU farm aid.

https://p.dw.com/p/3k77
The EU agricultural budget's biggest beneficiary, France, said a deal on the controversial subsidies is near.

ECB cuts growth forecast

The European Central Bank on Thursday slashed its 2003 growth forecast for the 12-nation euro zone. In the bank’s monthly report for June, the ECB said it expected euro area gross domestic product to expand by only 0.4 to 1.0 percent this year. Europe’s central bankers had previously forecast growth of 1.1 percent to 2.1 percent in 2003. The ECB cited the weak global economy and the Iraq war as factors in the revision down. It also said the SARS virus has a potential risk to world growth. The report also revised the bank’s inflation forecasts for 2003 and 2004. For this year the ECB now sees inflation of 1.8 to 2.2 percent and 0.7 to 1.9 percent for next year. The ECB cut its main interest rate by half a point last week to 2.0 percent to help spur growth.

German exports drop in April

German exports fell for the first time this year in April, the Federal Statistics Office said on Thursday. Exports totalled €53.8 billion (€63.2 billion) in the month, 3.4 percent lower than the year before. Compared to March, exports shrank a seasonally adjusted 2.2 percent in April. Imports also were lower, dropping 3.6 year-on-year and 4.8 percent from March. Analysts attributed the declining trade to the war in Iraq. Germany’s trade surplus in April was €9.2 billion compared to €9.4 billion in April 2002. Economists expect the strengthening euro will continue to hurt exports this year, as German goods become more expensive abroad.

French see German support on farm reform

French Prime Minister Jean-Pierre Raffarin said on Thursday Germany would support France’s efforts to weaken proposed reforms to European Unions farm subsidies. European agricultural ministers met on Wednesday and Thursday in Luxembourg to hash out the final details of the Common Agricultural Policy (CAP), which currently eats up roughly half of the entire EU budget. "We have laid out our positions on the Common Agricultural Policy. These positions are largely shared by Germany," Raffarin told reporters in Paris. German Chancellor Gerhard Schröder and French President said on Tuesday they had agreed on a common position for the negotiations. The two leaders said they would back a “partial decoupling” of aid for farmers linked to production from 2006 onwards. The EU Commission supports a complete end to production subsidies from 2004, before the agriculturally dependent economies of Eastern Europe join the EU.