GDP points to recovery in Germany

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FRANKFURT - The western German economy grew by half a per cent in the third quarter of 1993 from the previous quarter, indicating stabilisation after the steep decline into recession, writes John Eisenhammer.

Gunter Rexrodt, the Economics Minister, said the increase in third- quarter gross domestic product (which measures the output of all goods and services) supported the government's belief that the economy was slowly recovering.

While independent economists believe the economy is still bumping along the bottom they drew encouragement from the data underpinning the GDP increase, which showed modest rises in capital investment, private consumption, exports and building investment. GDP had grown by a similar 0.5 per cent in the second quarter from the previous one, but this had been because of stockpiling by firms after the production cutbacks at the height of the recession.

The most important talks in the 1994 wage round began yesterday as IG Metall met employers from the engineering sector. Employers are looking for a settlement well below 3.5 per cent.

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