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Business

IMF Revises Down Outlook for Germany and Other Major Economies

On the day when official data were released showing that the German economy grew by 0.3% in the second quarter, the IMF revises down its 2002 and 2003 growth outlooks for most major economies, including Germany.

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The global economic forecast isn't very rosy

With the global economic recovery proving slower than hoped, the International Monetary Fund has revised down its growth forecasts for most of the leading industrialized nations, Handelsblatt has learned.

In its latest World Economic Outlook, a copy of which Handelsblatt has seen, the IMF writes of a significant increase in its “concerns about the tempo and sustainability of recovery.” It pointed out that share prices had fallen strongly, while economic data from the United States and Japan were coming in below expectations. On top of that turbulence in a few isolated emerging economies had brought down other economies in sympathy.

The report will officially be presented on Sept. 25, just ahead of the IMF’s annual meeting.

The IMF is expecting 2003 to bring growth of 2.2% for U.S. gross domestic product, not 2.6% as previously forecast. It has also revised down its forecasts for Germany and the euro-zone. For Germany, it now sees growth of 0.7% in 2002 and 2.1% in 2003. For the euro-zone, it now expects growth of 1.1% in 2002 and 2.5% in 2003.

On Thursday, the Federal Statistics Office announced that Germany’s GDP in the three months from April to June was up by 0.3% on the quarter. It said a slight increase in consumer activity was offset by a decline in investments.

Economists are now on average expecting full-year growth to come in at 0.5%. “There won’t be a strong upswing in Germany for now, but a recession is not on the cards,” commented Joachim Scheider, head of the economics department at research institute IfW in Kiel.