BERLIN, Aug 13 - German Economy and Labour Minister Wolfgang Clement said on Wednesday the German economy did not grow in the first half of this year ahead of data expected to show the country has slid back into recession. "Given that we had no growth in the first two quarters of this year, there can be no job creation," Clement said in an interview with N-TV television. His comments echoed remarks by Chancellor Gerhard Schroeder who told a news conference earlier on Wednesday that second-quarter growth would be disappointing. The Federal Statistics Office will publish second-quarter gross domestic product data on Thursday at 0600 GMT. It is expected to show the economy shrank for a second quarter in a row, meaning Germany is in recession -- its second in two years.
A poll of economists forecast a contraction of 0.1 percent quarter-on-quarter and a year-on-year contraction of 0.1 percent. A weak German figure would bode ill for euro zone preliminary second-quarter GDP data due on Thursday, after data showed Italy also slid into recession in the second quarter. Germany and Italy together account for around half of the euro zone economy. Economists polled by forecast the 12-nation region failed to grow at all in the second quarter, after growing a mere 0.1 percent in the first quarter. Schroeder said engineering strikes in east Germany in June had a negative impact on economic growth in the second quarter but noted that industrial orders data and business climate indices indicated a recovery was on the horizon.
"The second quarter was influenced by strikes, among other things that are not so positive," he said. "The second quarter possibly won't meet expectations, but there are also clear signs of improvement." The expected weak GDP figure is likely to place additional pressure on the German government to revise down its full-year forecast for 0.75 percent growth. Most leading think-tanks see growth of around zero. But Schroeder dismissed calls for a revision: "I don't think much of constantly revising forecasts...it does not help confidence," he said. Schroeder was speaking at a press conference after his cabinet approved tax and benefit system reforms aimed at reviving sluggish German growth.
Analysts said the strong euro was braking export growth, traditionally the mainstay of the German economy, leaving the country dependent on private consumption to underpin a recovery. The euro has gained over seven percent against the dollar this year, hammering exports by making German goods more expensive abroad.//