BERLIN: The German Chamber of Industry and Commerce (DIHK) still expects Germany's economy to expand 3.5 percent this year, despite recent signs growth is slowing, and says there is no reason to worry about the outlook for next year.
"The good economic development that we have seen so far will continue even if it will not be quite as dynamic as at the start of the year," the president of the German Chamber of Industry and Commerce(DIHK), Hans Heinrich Driftmann, told Deutschlandfunk radio.
The DIHK forecast in May that Europe's biggest economy would grow 3.5 percent this year, but recent forward-looking German indicators have been falling on worries over the euro zone debt crisis and sluggish global growth.
Regarding his forecast for next year, Driftmann said: "We believe the economy will grow at a slightly slower pace but will still stabilise in a positive way."
"So there is no reason to spread gloom or be overly worried," he added.
Germany has recovered swiftly from its deepest post-war recession in 2009, outpacing euro zone peers, but its growth is expected to have peaked. Its economy grew by 1.5 percent in the first quarter of the year and many economists expect expansion in the second three months of 2011 to cool to 0.5 percent or less.
Driftmann said he believed Germany had the room to manoeuvre to implement a tax reform.
Tax revenues have been higher than expected this year and the ruling coalition has agreed to cut taxes, probably focused on low and middle income earners and just in time for the next national elections in 2013 -- a decision Driftmann called "sensible" in order to support the economy.
However, polls suggest most Germans would prefer the government to focus on reducing its budget deficit rather than cutting taxes.
Copyright Reuters, 2011
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