German Economic Growth Hits Zero

Thursday, August 23, 2001 Last updated at 6:24:09 AM PT

THE ASSOCIATED PRESS

BERLIN -- Germany's economy showed no growth in the second quarter compared with the first three months of this year and has grown at a slim annual rate of 1 percent for the first half of the year, the government said Thursday.

Germany's central bank last week predicted a flat performance in the second quarter, and some economists had forecast that gross domestic product would contract slightly.

Following a series of downward revisions by economic institutes, Chancellor Gerhard Schroeder conceded this month that German growth may slow from 3 percent last year to between 1.5 percent and 2 percent over the whole of this year. The government's official target is 2 percent.

Responding to Thursday's figures from the Federal Statistics Office, the Finance Ministry insisted that growth should accelerate in the second half of the year if inflation continues to decline.

"The gross domestic product estimates ... show without a doubt that the risks for the economy haven't diminished," the ministry said in a statement.

"Nonetheless, chances exist that the factors supporting growth will prevail during the remainder of the year," the ministry added. It said recent tax cuts made as part of a larger 2001-2005 tax reform package would support the economy.

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-- Martin Thompson (mthom1927@aol.com), August 23, 2001