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Konjunkturelle Aufwärtstendenz zu Jahresbeginn

Press Release of February 25, 2004

The main macroeconomic indicators for Germany are pointing to improvement in the basis cyclical trend at the start of the year, according to DIW Berlin’s current Weekly Report, No. 9/2004. The latest figures on orders received are clearly pointing upward. Growth in orders received from abroad was very strong in the review period, at 3.7% quarter-on-quarter, and orders from domestic customers were similarly dynamic. The current DIW economic barometer also indicates acceleration at the start of the year. All in all, growth in real GDP of 4%, after adjustment for seasonal factors and working days, is to be expected for the first quarter of 2004.
Real investment in equipment may be expected to grow further, as there is much leeway to be made up and with better foreign trade expectations. Real building investment could profit as more building projects are now being started after the plans were brought forward last year. In the final quarter of 2003 orders received by the construction industry were up by just under 1%. A robust trend is evident in exports and demand for German goods should continue to increase, from both the North American area and the central and eastern European countries. The exchange rate between the Euro and the US dollar still constitutes a risk; should the rate for the Euro rise higher the stimulus to foreign trade from the United States could ebb again.

A more dynamic trend in imports from lower import prices due to the higher Euro could have a dampening effect. Altogether, however, the contribution from foreign trade should provide noticeable support for output in the economy as a whole.

A negative factor is that a serious improvement is not yet evident in private consumption. The income tax reform that came into force at the beginning of the year did lead to higher net incomes, but that effect is lessened by the additional charges on private household for health services.