GERMAN GROWTH WILL NOT CUT U.S. DEFICIT -BANGEMANN
Economics Minister Martin Bangemann, who
flies to Washington this weekend for high level talks, said
boosting West German economic growth would not have any
significant effect on the high U.S. Current account deficit.
    In a paper prepared ahead of his trip, Bangemann said
Bonn's trading partners had been asking whether West German
growth was slowing and whether the Federal Republic should not
in the future pursue more strongly expansionary policies.
    In the paper Bangemann wrote, "It is not possible to reduce
the U.S. Current account deficit by any signficant amount just
through more stimulation of the West German economy."
    One U.S. Administration policy maker said in Washington
this week that the United States government wanted West Germany
and Japan to reduce their interest rates even further to
stimulate their economies.
    Bangemann said it was clear the high mark, as well as
uncertainty about further currency developments, was making
companies here cautious about production plans and investments.
    While West Germany did not seek exchange rates which
unilaterally favoured its exports, it favoured more stability
and realistic rates, which corresponded to "fundamentals."
    He welcomed the February "Louvre Agreement" of six industrial
nations to stabilise currencies and said, "(We) expect all
parties to hold by the accords struck there." West Germany had
fulfilled its pledge of boosting planned tax cuts, he noted.
    Despite calls for lower interest rates, Bundesbank
Vice-President Helmut Schlesinger has hinted that central bank
policy may even have to be tightened.
    He wrote in a newspaper article published yesterday that
the Bundesbank's current accommodative stance could not
continue in the long term.
    During his trip to Washington, which runs from April 26 to
29, Bangemann will meet Secretary of State George Shultz, trade
envoy Clayton Yeutter, World Bank President Barber Conable, IMF
Managing Director Michel Camdessus and Paul Volcker, Chairman
of the Federal Reserve Board.
 REUTER
