The German Economy in the Spring of 2001.

In Germany the cyclical upturn came to an end during the second half of 2000. Since then there has been no further increase in overall capacity utilization and recently it has even declined slightly. Although in industry incoming orders and output have continued to grow, there is notably less optimism on business prospects. Although economic growth in Germany has lost momentum to a greater extent than expected, the Institutes are sticking to their view that the economy will not experience an extended period of weak economic growth, not to mention a recession. Since the middle of last year the expansion of domestic demand has weakened perceptibly. In the wake of the oil-price shock and the associated loss of purchasing power, private consumption, in particular, has lost momentum. The effects of the weakening of global economic growth can now be expected to strengthen. As a result a marked decline in export growth seems likely, although there is no sign of an absolute contraction. As detailed in the report on the world economy, the signs are that the USA will avoid a recession and that the US economy will recover during the second half of the year.