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Merkel dampens hopes of fresh German stimulus soon

(Agencies)
Updated: 2008-12-14 20:21

BERLIN -- Chancellor Angela Merkel played down any prospect of Germany agreeing fresh stimulus measures soon, saying she will use a "growth summit" on Sunday to first assess the economic situation in Europe's largest economy.

German Chancellor Angela Merkel arrives on the second day of an European Union leaders summit in Brussels December 12, 2008. Merkel played down any prospect of Germany agreeing fresh stimulus measures soon, saying she will use a "growth summit" on Sunday to first assess the economic situation in Europe's largest economy. [Agencies]

Merkel has faced pressure from other European leaders to do more to promote growth, and raised some hopes on Thursday when she said Germany knew it had a responsibility as an economic power and would consider new stimulus measures over time.

The focus at Sunday's meeting would be on taking stock of the economic situation, and preparing possible ways to respond should circumstances deteriorate further, the chancellor told the Bild am Sonntag newspaper.

"We want to develop possibilities to be able to quickly combat an intensification of the crisis," she said.

"Today is about reaching a joint assessment of the situation and the outlook for 2009, together with the social partners, companies and banks and experts on the economy," she added.

Merkel will meet trade unions, business leaders and economic experts at the growth summit later on Sunday.

Germany and the euro zone fell into recession this summer and face a deteriorating economic outlook.

The Munich-based Ifo think tank on Thursday forecast German gross domestic product (GDP) would shrink by 2.2 percent in 2009 as the economy's export engine suffers from weak foreign demand. The forecast marked a sharp revision from Ifo's June projection for growth of 1.0 percent.

Such a contraction would represent Germany's weakest annual economic performance since the Federal Republic was founded in 1949 out of the rubble of World War Two.