German GDP predicted to grow by 1.8%

German economic think-tank the Ifo Institute said it expects German GDP growth of 1.8% next year.

The president of the research institute, Hans-Werner Sinn, said that next year's tax cuts should account for 0.2% points of the expected growth with the higher number of working days in 2004 compared to 2003, giving rise to an additional 0.5% points.

The economic outlook has not been so favorable in Germany for some time, Sinn said at the presentation of Ifo's latest forecasts in Munich today.

However, he also advised that a recovery in the German labour market is still not in sight.

He said unemployment will ease slightly to an average 4.3 million people in 2004 from 4.38 million in 2003, but only as a result of statistical adjustments.