| Germany was rated "unfavorable" in economics This year, German GDP growth will not exceed 0.5%. This is stated in the traditional spring expert report of the “six wise men” presented this week - heads of institutes in Berlin, Essen, Hamburg, Halle, Munich and Kiel, engaged in research on the national economy of Germany. Last fall, they believed that economic growth in 2003 would be no lower than 1.4%. The “wise men” associated these expectations with a possible peaceful resolution of the Iraqi crisis.
Correction of growth indicators promises unpleasant consequences for the German economy. The point is not only that the treasury will miss huge sums from tax revenues. Finance expert Philipp Nimmermann from BHF Bank predicts the budget deficit will rise to 72 billion euros, or 3.4% of GDP. This foreshadows new troubles for the German government in dealing with Brussels officials. Let us remind you that according to the Euro Stability Pact, signed by EU countries, this figure should not exceed 3%. Last year, Germany and Portugal turned out to be “convention violators.”
To equalize economic indicators, the “wise men” propose deep economic reforms to Germany. Experts chided Chancellor Schröder for his indecisiveness in reforming a wasteful social system that Germany can no longer afford under current conditions.
The Chancellor has to withstand a serious blow both from the opposition and from within his own party. Last month, Schröder made a government statement in the Bundestag, in which he informed the nation of the impending cuts in unemployment benefits and the timing of their payments (from the current 32 to 12 months). By 2010, more modest public health and pension systems should be in place. However, a wave of protest arose against these plans from the left wing of Social Democracy, as well as leading trade unions.
The internal party dispute went so far that it was decided to hold an emergency congress of the SPD on June 1 in Berlin, which will decide the issue of the party’s confidence in its chairman Schröder. The situation is reminiscent of the story of 20 years ago, when, as a result of a similar internal party conflict, Helmut Schmidt had to leave not only the post of head of the party, but also his office in the department of the Federal Chancellor.
However, most experts do not expect a quick collapse of the ruling “red-green” coalition. It is believed that “party purgatory” will strengthen Schröder’s reformist positions. And then, you see, the world situation will smile on Germany. For next year, the “wise men” predict GDP growth of 1.8%. They assume that in 2004 there will be a “slow recovery” of the market situation - after the end of the Iraq war, the degree of uncertainty among consumers and enterprises will decrease, exports will grow and financial policy will become more expansive. Yuri Shpakov, Berlin |
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