Frankfurt, Nov. 18 (Bloomberg) -- German economic growth probably stalled in the third quarter as companies scaled back production, analysts said in advance of a Bundesbank estimate today. Germany's gross domestic product probably expanded 0.3 percent from the previous three-month period, the same rate as in the preceding two quarters, according to 21 economists surveyed by Bloomberg News. From a year ago, it grew 0.6 percent, they said. Germany accounts for about a third of the economy of the dozen nations that share the euro. Companies from insurance broker MLP AG to forklift maker Linde AG are reporting declining profits as demand for their products weakens. Germany's benchmark DAX stock index has shed more than a third this year. ``We're lacking growth impetus,'' said Anton Boerner president of the BGA association of wholesalers and exporters, who expects Germany's foreign trade to grow 1.25 percent this year compared with average growth of 6.6 percent. ``The world economy is in a difficult situation and at home consumers and businesses are holding back.''
The European Commission last week pared its growth forecast for the region as demand slows, stock markets fall and executives are becoming more pessimistic. European Central Bank officials hinted the bank's council may lower borrowing costs to help restore confidence at its Dec. 5 rate-setting meeting. ``The weakening outlook for growth this year and next leads us to expect that inflation rates will come down, and the ECB council will have to take that into consideration,'' ECB council member Ernst Welteke told reporters in Marburg, Germany, on Wednesday.
`Insufficient' Growth
Italy's economy, Europe's fourth-biggest, grew 0.3 percent from the second quarter, when it expanded 0.2 percent, the government said Thursday. Growth in the Netherlands was 0.1 percent, less than analysts forecast, a separate report showed. ``There was growth in the third quarter, but it was insufficient,'' said Bundesbank Vice President Juergen Stark. The third and fourth quarters ``won't contribute on average to growth of more than 0.5 percent'' this year. Business confidence in Germany dropped for a fifth straight month and unemployment rose to the highest in almost four years in October. The economy will grow 0.2 percent this year and one percent next, a panel of advisers to the government known as the ``Five Wise Men'' said in their annual assessment of the economy. ``The deterioration in the labor market intensified in the third quarter'' in Germany, France, Italy and Spain, said Silvia Pepino, an economist at J.P. Morgan Chase & Co. in London. The ECB ``is moving closer to a policy easing.''
ECB Council member Klaus Liebscher said the economy probably won't reach ``potential'' growth of 2 to 2.5 percent before the second half of 2003.
Prices
An index of European manufacturing prices fell in October from September while prices charged in the dozen nations' service industries continued to contract last month. Consumer price inflation in the region reached 2.2 percent in October. The bank aims to keep inflation below 2 percent. Investors expect the ECB to trim its main rate from the current 3.25 percent before the end of the year, making credit cheaper for consumers and companies in the 12 nations from Portugal to Finland. The implied yield on the three-month Euribor contract for December is at 2.94 percent, compared with a yield of the current three-month lending rate of 3.12 percent. //www.quote.bloomberg.com