Ifo slashes Germany 2012 growth forecast to 0.4% from 0.8%

Germany's economy could lose momentum over winter and will grow just 0.4% next year, the Ifo institute said on Wednesday, as uncertainty over the euro zone crisis and a global economic slowdown prompts firms to invest less and weighs on exports.
This was just half the 0.8% growth Ifo had forecast for 2012 together with other leading economic institutes in October, reflecting the sharp deterioration in the outlook for Europe's largest economy over the past few months.
"The recovery in Germany will likely not continue, the economy will probably even experience a downturn in the winter," Ifo said in a statement. "The loss of momentum in the world economy and in particular the many consolidation and savings programmes in the euro zone in reaction to the sovereign debt crisis will likely weigh considerably on exports."
Germany long looked resilient to the debt crisis engulfing its neighbours, posting strong growth on the back of solid exports and even private consumption.
Yet data last week showed exports posting their biggest fall in half a year and the Bundesbank slashed its 2012 growth forecast to 0.6%, a third of the 1.8% growth it predicted six months ago.
"Under the assumption that the euro crisis will not worsen further and in particular Italy will be able to finance itself on the market, Germany should be able to avoid a recession," Ifo said.
"However the German gross domestic product will probably only grow 0.4% in 2012."