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German Government Rejects Call For Econ Growth

Monday, January 28, 2008

German Government Rejects Call For Econ Growth Stimulus Package

BERLIN -(Dow Jones)- German Chancellor Angela Merkel's government Monday rejected calls for a growth stimulus package to boost the economy amid the current financial market crisis.

"Our assessment of the current economic situation is that we see currently no need for growth stimulus packages," finance ministry spokesman Stefan Olbermann told reporters at the government's regular government press conference.

He said the government, which presented its annual economic outlook report last week, made clear that there is no need for any short-term measures.

The comments come after Dominique Strauss-Kahn, the managing director of the International Monetary Fund, warned that the current global credit crunch is so severe that lower interest rates alone won't be enough to solve the problems. He told daily the Financial Times that other countries should follow the U.S.'s stimulus package suit.

Anne-Kathrin Roethemeyer, spokeswoman for the economics ministry, said Germany's economy is currently in "quite a decent state." The government last Wednesday cut it's 2008 growth forecast to 1.7% from 2.0% predicted previously, saying that the upswing is slowing, but remains in tact.

Government spokesman Ulrich Wilhelm said the financial market turbulence "will be monitored closely" by Germany and other European Union countries.

Speaking at the same press conference, Wilhelm stressed that the government, along with the Bundesbank and many economic research institutes, agree that "core data...are good."

"Of course one has to draw conclusion from the financial market crisis," Wilhelm said, adding that Tuesday evening's meeting between Europe's Group of Eight leading nations' leaders in London will discuss this.

"The talks will address measures to further strengthen the capacity to act on an international basis when it comes to crisis management, to create more transparency regarding important acting parties, such as hedge funds. And by exchanging views we will be able to act faster when needed," Wilhelm said.

French President Nicolas Sarkozy, German Chancellor Merkel, outgoing Italian President Romano Prodi and U.K. Prime Minister Gordon Brown are due to meet in London Tuesday, with a press conference due at 1930 GMT.

Wilhelm reiterated that no concrete decisions are expected at the meeting, which will also be attended by European Commission President Jose Manuel Barroso.

Posted by MOHAMED SAID at 5:36 AM  


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