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German gov’t advisors paint gloomy outlook for economy

07 November 2012 22:13 (UTC +04:00)

Baku-APA. An advisor panel for the German government warned on Wednesday that German economy is losing its momentum and might continue to keep a slow pace in next year, APA reports quoting Xinhua.

German Council of Economic Experts, consisted of so-called "Five Wise Men", said in its report that German economy might grow only 0.8 percent in 2013, the same rate as they predicted for this year.

"The economic momentum in Germany has progressively slowed in the course of 2012 in the wake of the euro crisis," wrote the advisors.

German economy grew 0.3 percent in the second quarter, lower than in the previous three months, when it grew at a rate of 0.5 percent.

Official data for the third quarter is set to be published at mid-November, and expected to be further lower.

The advisors are more pessimistic than German government and leading economic institutes, both of whom have forecast German economy to grow by 1.0 percent in 2013, slightly higher than 0.8 percent as they projected for 2012.

German factory orders slumped 3.3 percent in September from August, the largest rate of fall this year, and fell by 4.7 percent compared to the same period of last year.

German Economic Ministry said on Wednesday that German industrial output in September dropped by 1.8 percent from the previous month, adding that "industrial production in the last quarter will be weighted by weak order levels".

The Council predicted an inflation rate of 2.0 percent in both 2012 and 2013, and expected the labor market to be stable, with unemployment of 6.8 percent in this year and 6.9 percent in the next.

For public finance, they expected German government to have a surplus of 0.1 percent of GDP this year, and a deficit of 0.1 percent in 2013.

The Council urged German government to launch continuous actions in the field of economic policy, involving energy, healthcare, taxation of business, as well as labor market and pension system.