Tuesday June 24, 01:20 PM
Ifo ups FY German GDP forecast to 2.4 pct, expects slowdown to 1.0 pct in 2009
MUNICH (Thomson Financial) - The Ifo research institute said it raised its German GDP growth forecast for this year to 2.4 percent from 1.8 percent, but forecast a noticeable slowdown to 1.0 percent in 2009 on the back rising of prices for oil
and raw materials as well as the strong euro.
'The cooling of world economic activity will dampen foreign sales; the stronger euro is an additional retarding factor,' Ifo said in a statement.
It added that high costs for energy will limit the increase in company profits and reduce the financial scope for new investments, as well as limiting private spending.
In 2009, Ifo expects investments in plant and equipment to hardly show any expansion and stimulus from foreign sales to become weaker.
Inflation is seen easing to 2.4 percent in 2009 from 3.1 percent in 2008 and the unemployed rate is seen improving to 7.1 percent from 7.5 percent.
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