Institute Cuts 2005 Growth Forecast

One of Germany's leading economics institutes has trimmed its economic growth forecasts for 2005 by half a percentage point due to slowing exports and rising unemployment. In October, the IWH institute in Halle had predicted the German economy would grow 1.8 percent in 2005 in a forecast in September. But economists have revised that number down to 1.3 percent, partly due to fact that the euro's 10 percent rise in value against the dollar in the last six months is making exports, a key driver of the German economy, more expensive abroad just as global economic growth is slowing. In addition, unemployment in Germany has hit a six-year high which is putting a damper on consumer spending. Udo Ludwig, chief economist at the IWH institute, said in an interview that consumer spending should start picking up in the second half of next year. IWH is the third of six institutes for lower its growth forecasts this month.