Germany's Council of Economic Advisers predicted Wednesday that the nation's growth rate will slip back to 1.4 per cent next year with high oil prices and a strong euro casting a shadow over the outlook for Europe's biggest economy. Known as the "five wise men", the council, which presented its report to Chancellor Gerhard Schroeder Wednesday, also painted a very bleak picture for the German job market with unemployment expected to remain stuck at 10.5 per cent next year and projected a slide in export growth. The council's 2005 growth forecast is also more pessimistic than the 1.7 per cent projected by the government. Both the government and the council expect German growth this year to come in at a moderate 1.8 per cent. The five-member council sees a gradual pick-up of domestic demand next year with the global economy underpinning Germany's foreign orders. But the government advisers warned of the risks resulting from "a possible future strengthening of the euro and an increase in oil prices." With Germany having emerged last year as the world's leading export nation, Schroeder said when receiving the report that while the country had turned in a good performance in trade, a weak domestic economy meant that "we still have some more work to do." The five wise men see private consumption growing by a meager 0.7 per cent in 2005 after stagnating this year with overall domestic demand growing at 0.8 per cent in 2005 after 0.2 per cent this year. But the council's comments on the euro, which on Wednesday hit a new record high of 1.3030 dollars mark, follows a string of remarks by leading European officials as concerns have grown about the impact of the strong common currency on the 12-member eurozone's export machine. "Everybody is concerned with the euro-dollar exchange rate and the impact ... on exports," Schroeder told business leaders in Berlin Tuesday. Up until now exports have been the key driving force behind both German and eurozone growth. --more 1449 Local Time 1149 GMT
