Oil Prices to Curb German Economy in 2006

According to the research conducted by the Hamburg Institute of International Economics (HWWA), which was made public on Monday, high oil prices will be responsible for slowing down the German economic growth in 2006. The HWWA announced it had corrected its German economic forecasts for both 2005 and 2006. The corrected prognosis anticipates economic growth of 1 percent in 2006 (down from 1.3 percent) and 0.6 percent in 2005 (down from 0.7 percent). "The forecast correction reflects the stronger burdens on private households and enterprises imposed by higher prices for crude oil and other energy sources," said researchers. The study has not taken into account the possible effects of the German federal elections on economic trends in Germany. "We are assuming that an efficient government will be formed quickly and the necessary reforms tackled in a timely manner," the report said. The German government, along with most economic experts, is expecting German economic growth in 2005 to be around 1 percent.