GERMAN ECONOMY SEEN GROWING TWO PCT IN 1987
Bundesbank vice-president Helmut
Schlesinger said that although West German economic growth was
not expected to be satisfactory in the first 1987 quarter, two
pct growth was still attainable for the whole of the year.
    A further rise in the value of the mark would worsen export
prospects and have a negative effect on investments, he told
the Sueddeutsche Zeitung newspaper in an interview. But if such
an appreciation did not materialize, the economy would expand.
    The federal government has predicted a growth rate of 2-1/2
pct or more in its annual economic report published in January,
but some economists have said the forecast was too optimistic.
    Schlesinger said private consumption was likely to rise
strongly. Government expenditure and construction were also
expected to increase. But there was uncertainty about the
prospects for exports and investment.
    The Bundesbank had viewed with concern the money supply
overshoot in 1986, but the sharp rise was unlikely to have an
effect on inflation in the forseeable future. However, there
were potential dangers in the long run.
    Schlesinger said there was hope that in 1987 the West
German money supply would grow within the three to six pct
target zone set in December.
    Schlesinger said the dampening effect on inflation of the
drop in import prices could continue to a lesser degree for
some time. Prices in West Germany were likely to rise between
one and two pct this year.
    He said 1987 would be the fifth successive growth year for
the West German economy. Although there was a possibility of a
downturn at some stage in the future, there were no signs this
would happen in 1988.
    The main risks for the West German economy stemmed from its
close ties with the rest of the world, Schlesinger added.
 REUTER
