German government slashes growth forecast
FRANKFURT, Germany (AP) — The German government has slashed its growth forecast for this year and next, blaming troubles abroad for unsettling businesses while arguing the domestic economy remains strong.
The Economy Ministry has cut this year's growth figure to 1.2 percent from 1.8 percent earlier this year and next year's to 1.3 percent from 2 percent.
Economy and Energy Minister Sigmar Gabriel said in a statement that "the German economy finds itself in difficult external waters." He pointed to only moderate global growth.
Germany is a major exporter. As well, the conflict between Russian and Ukraine has sown uncertainty and deterred business investment.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.
Germany's ZEW survey of investment analysts fell for the tenth consecutive month in October, adding to a string of downbeat economic data about Europe's largest economy and the eurozone as a whole.
The index fell to minus 3.6 points from 6.9 points in September. That was worse than the zero expected by market analysts.
The ZEW reading published Tuesday follows drops in industrial production, exports, factory orders, and the much-watched Ifo confidence survey among business executives. The run of worrisome numbers has raised fears Germany's economy may stagnate or even slip into recession in coming months.
ZEW institute head Clemens Fuest said Tuesday that geopolitical tensions and weakness in some economies in the 18-country euro currency union were to blame. Russia's conflict with Ukraine has triggered sanctions between Moscow and the West, putting German businesses on edge and deterring investment.
Germany's troubles are adding to worries about the overall fate of the European economy. The eurozone showed zero growth in the second quarter from the quarter before, dragged down by a 0.2 percent contraction in Germany. The weak eurozone figure followed four quarters of unsatisfactory growth as the currency union made a start at recovering from a crisis over high government debt.
The failure to achieve stronger growth and to lower unemployment from a painfully high 11.5 percent has raised fears in the eurozone of another downturn that could complicate member countries' efforts to reduce debt.