The German government has lowered its forecast for GDP growth this year to 1.0pc from its previous forecast of 1.5pc, as expected. Leading commentators had consistently forecast growth of under 1.5pc, but up until now, the German government persistently maintained its own predictions. However, in the face of mounting economic uncertainty, falling consumer confidence, shaky stock markets, and the looming possibility of a US-led war against Iraq, the government of the eurozone's largest economy finally conceded that growth progress would be slower than hoped for
To make matters worse, the surging euro is expected to knock 2.5pc off German export growth this year, and reduce GDP growth by at least a quarter of a percentage point, according to Commerzbank economists. In their latest report, published today, they forecast export growth of 3.8pc in 2003, and GDP growth of just 0.8pc - even lower than the government's revised forecasts of 4.5pc this year and GDP growth of 1.0pc. //www.fxcentre.com