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Germany unlikely to meet deficit target: adviser

BERLIN: Germany is unlikely to keep its deficit below three percent of gross domestic product this year, the limit set by the European Union Stability Pact, one of the country's top economic advisers was quoted as saying on Monday.

Wolfgang Wiegard added that Germany would have to accept any financial penalties imposed by Brussels for breaching the target.

"The three percent limit will probably not be reachable this year," Wiegard, one of the government's five "wise men" economic advisers, told Handelsblatt business daily.

He also said the government's growth forecast of one percent in 2003 could only be achieved if there were positive developments, and he reiterated that GDP would expand by just 0.6 percent to 0.7 percent.

Wiegard felt it was too soon for the EU to relax the deficit limits because of the US-led war against Iraq and he said it was too early to say what impact the war would have on Germany.

There was also no need for the European Central Bank to lower interest rates further and he did not expect a global recession because of the Iraq war, he said.

"In a worst-case scenario it could lead to a worldwide recession, but I believe that it's highly improbable."

A greater threat for Germany, he said, could be US budget and current account deficits if they led to a sharp appreciation of the euro against the dollar.-Reuters