Economic Advisers Trim German Growth Forecast

The council of economic advisers to the German government has trimmed its growth forecast for 2020 to 0.9%, one percentage point below the rate the government itself forecast in October, the Frankfurter Allgemeine newspaper reported on Tuesday.

The body, which advises the finance ministry on policy, expects growth of 0.5% this year, according to the newspaper, which had seen a copy of recommendations due to be presented to the government on Wednesday.

In the document, the five academic economists said they saw the development as a temporary downturn, and did not expect a “broad and deep recession”. However, they urged caution regarding Germany’s famed “black zero” balanced budget policy.

“A commitment like the black zero makes sense in times of cyclical overheating,” they wrote. “But sticking to a balanced budget risks leading to a problematic pro-cyclicality in downturns.”

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