The International Monetary Fund will again lower its growth forecast for Germany this year and expects the biggest euro-zone economy to expand by just 1.3 per cent in 2001, the Financial Times Deutschlandreported today.
The IMF had already cut its forecast for German growth this year in March to 1.9 per cent from 3.3 per cent previously.
Quoting sources close to the fund, FT Deutschlandsaid that an IMF delegation was currently in discussions with the German government, the Bundesbank and leading economic think-tanks in the country and the revised forecast would be published in a report scheduled for release in August.
A number of experts and economic research institutes have recently lowered their German growth forecasts for this year to 1.2-1.7 per cent, while the government is sticking to its forecast of 2 per cent.
Should the German economy really expand by just over 1 per cent, it could have serious repercussions for the government's budget deficit target.
Under its stability programme, Berlin hopes its budget deficit will be no more than around 1.5 per cent of gross domestic product (GDP) this year.
But IMF has calculated that it could shoot up to 2.0-2.5 per cent of GDP if growth is weak.
The leading economic research institute Ifo also forecast earlier this week a German deficit ratio of 2.0 per cent this year.