Economy economic activity 2003: Forecasting and reality

For the third time in succession, economic performance in Germany fell behind the expectations of the professional augurs. In retrospect, 2003 proved to be a further disappointing year; the upswing that is urgently needed for the labour market did not occur. In their autumn 2002 forecast, the German economic research institutes had revised their spring 2002 forecast downward by 1 percentage point to 1.4 %. Of the estimation error for the growth rate of GDP of 1.1 percentage points, 0.9 percentage points was due to the revision of total economic output. The remaining 0.2 percentage points was attributable to developments in the second half of 2002. The main reason the misjudgement of economic growth, especially in the first half of 2003, was the international economic situation, which was more unfavourable than initially assumed. In terms of the domestic economy, the rise in indirect taxes and social fees at the beginning of the year was a dampening factor. In the second half of the year half, consumer confidence was negatively impacted by the long deliberations on new social reforms and the uncertainty of whether the third stage of the 2000 tax reform would be implemented.