One of Germany's six leading economic institutes has cut its gross domestic product growth forecast for the eurozone's largest economy in 2003 to 1.1pc from 1.4pc. In its latest report, the Institut fur Wirtschaftsforschung Halle (IWH) said, "The upturn will take hold in the summer, at the earliest". It added the latest ECB interest rate cut will have only a small effect on the economy, but will help to ease deflation worries in Germany. The institute also cuts its 2002 GDP growth forecast to 0.2pc from 0.4pc previously. For 2004, it said it expects GDP growth of 2.3pc. For the labour market, the IWH expects in 2003 the number of jobless to rise to 4,190,000, of which 2,950,000 will be in West Germany and 1,240,000 in East Germany.
Earlier today, Bundesbank president Ernst Welteke said that the economy would grow by between zero and 0.5pc next year. Nevertheless, Welteke, who as head of the German central bank also sits on the policy-setting governing council of the European Central Bank, said the danger of deflation in Germany was still "very remote". //www.fxcentre.com