Berlin Cuts 2006 Growth Forecast

Though German growth rallied in the third quarter the news was quickly shrouded by a government cut in growth prospects for next year. The Bundesbank said that quarterly growth rose on strong exports after a stagnant second quarter. Outgoing Economics Minister Wolfgang Clement then announced that the government had cut its forecast for economic growth for 2006 to 1.2 percent from 1.6 percent, blaming high oil prices.The Bundesbank said in its monthly report for October that the current figures indicated that gross domestic product (GDP) "clearly rose in the third quarter according to seasonally-adjusted data. The upward movement of the German economy continued during the summer months after sideways movement in the second quarter." In the second quarter, GDP had not progressed after a rise of 0.8 percent over the first three months of the year.