German Foreign Trade Loses Confidence

The prognosis for Germany's foreign trade was optimistic at the start of the year, but only three months later, that optimism has started to fade. The Federation of German Wholesale and Foreign Trade (BGA) has revised its predictions on development in the export economy and economic growth downward. Instead of 1.5 percent economic growth in 2004, the BGA now says it expects only 1.2 percent. BGA President Anton Börner said the German government would be well advised to reconsider its estimates of 1.5 to 2 percent growth this year. Börner said he doubted whether the expected 3.8 percent growth in exports to €687 billion ($844 billion) would be enough to compensate for continuing stagnation on the domestic market. Other risk factors dampening the BGA's prognosis are the price of oil, which Börner warned could climb to more than $33 per barrel this year, and the continued strength of the euro against the dollar. The threat of international terrorism, he said, was also a factor, especially if last week's bomb attacks in Madrid are the start of another wave of terrorist attacks.