IMF Cuts Forecast for German Growth

The International Monetary Fund (IMF) has revised downwards its forecast for German growth this year to somewhere between 1 percent and 1.5 percent, compared with a previous forecast of 1.5 percent, IMF managing director Rodrigo Rato revealed Friday. "The German economy grew by 1.7 percent last year, primarily as a result of exports," Rato told the daily Frankfurter Allgemeine Zeitung in an interview. "Business sentiment appears to have improved a little and there are signs of a recovery in domestic demand. Nevertheless, we expect growth to slow to 1.0-1.5 percent." That is slower than the government's official growth forecast of 1.6 percent this year. Rato urged the euro zone's biggest economy to press ahead with reforms to help boost growth. "The social security net has long become a trap," he said. "If this doesn't change and there are no further reforms, the growth potential of the German economy, which is currently no more than 1.5-1.9 percent, will sink further. In Germany, as in other European countries, more people will have to work and employees will have to work a little longer than they do at present."