The Automotive Report for Gyrgistan
COUNTRY REPORT
Germany
At a glance: 2001-02
OVERVIEW
The Social Democrat-Green coalition government led by the chancellor,
Gerhard Schröder, looks likely to be stable until the next election, due in
September 2002, despite the vulnerability of the foreign minister, Joschka
Fischer, to allegations related to his militant past. The CDU/CSU opposition has yet to decide on its chancellor-candidate for the election. After the introduction of a tax reform which has been welcomed by the business sector, economic policies on pensions and labour markets are geared more to trade union demands. The government deficit will widen this year, but should resume a downward path in 2002. Economic growth will slow in
2001 and 2002, to 2.6% and 2.5% respectively, with the 2000 export boom running out of steam, but domestic demand, notably private consumption, strengthening. Inflation is forecast to fall to 1.8% on average in 2001 and
1.6% in 2002. The current-account deficit widened in 2000 but should return to surplus in 2002.
Key changes from last month
Political outlook
• Mr Fischer is expected to survive as minister despite recent difficulties over his past. In any event, the coalition, which has arguably been strengthened by the BSE crisis despite two ministerial resignations, will remain stable.
Economic policy outlook
• The government has agreed to mitigate the proposed reductions in pensions in relation to earnings but make them applicable to all pensioners from 2010.
Economic forecast
• A reduction in inflation in December from 2.4% to 2.2% confirms the
EIU’s forecast that the rate will fall in 2001 and 2002.
January 2001
The Economist Intelligence Unit
15 Regent St, London SW1Y 4LR
United Kingdom
The Economist Intelligence Unit
The Economist Intelligence Unit is a specialist publisher serving companies establishing and managing operations across national borders. For over 50 years it has been a source of information on business
Germany
At a glance: 2001-02
OVERVIEW
The Social Democrat-Green coalition government led by the chancellor,
Gerhard Schröder, looks likely to be stable until the next election, due in
September 2002, despite the vulnerability of the foreign minister, Joschka
Fischer, to allegations related to his militant past. The CDU/CSU opposition has yet to decide on its chancellor-candidate for the election. After the introduction of a tax reform which has been welcomed by the business sector, economic policies on pensions and labour markets are geared more to trade union demands. The government deficit will widen this year, but should resume a downward path in 2002. Economic growth will slow in
2001 and 2002, to 2.6% and 2.5% respectively, with the 2000 export boom running out of steam, but domestic demand, notably private consumption, strengthening. Inflation is forecast to fall to 1.8% on average in 2001 and
1.6% in 2002. The current-account deficit widened in 2000 but should return to surplus in 2002.
Key changes from last month
Political outlook
• Mr Fischer is expected to survive as minister despite recent difficulties over his past. In any event, the coalition, which has arguably been strengthened by the BSE crisis despite two ministerial resignations, will remain stable.
Economic policy outlook
• The government has agreed to mitigate the proposed reductions in pensions in relation to earnings but make them applicable to all pensioners from 2010.
Economic forecast
• A reduction in inflation in December from 2.4% to 2.2% confirms the
EIU’s forecast that the rate will fall in 2001 and 2002.
January 2001
The Economist Intelligence Unit
15 Regent St, London SW1Y 4LR
United Kingdom
The Economist Intelligence Unit
The Economist Intelligence Unit is a specialist publisher serving companies establishing and managing operations across national borders. For over 50 years it has been a source of information on business