Germany's DIW research institute said today the country's economic recovery is failing to live up to expectations as it cut its forecast for German growth in the first quarter of 2004.
"The economy does not seem to be at the start of a perceptible recovery, particularly as the tax reforms are not providing any essential impulses," the DIW said in a statement.
In its monthly update on the state of the economy, DIW revised down its forecast for 2004 GDP growth to just 0.1 per cent from 0.4 per cent.
In 2003, GDP in Europe's biggest economy contracted by 0.1 per cent. DIW has forecast German GDP will grow by 1.4 per cent in 2004 as a whole.
DIW's forecast came after data in the past week showed a 2 per cent decline in industrial orders and a slight drop of 0.1 per cent in industrial production in January.
Mr Gustav Adolf Horn, the institute's chief economist, said data published today showing German exports had risen a seasonally adjusted 6 per cent in January from December presented a misleading picture of growth.
"Those are big contracts which have already been reflected in the industry orders. No cause for elation. Exports are moving along, but if we're to talk of an economic motor here, then it's a weak motor," said Mr Horn.