Kohl says signs point to end of German downturn in '94

FRANKFURT (Reuter) - Helmut Kohl, the German Chancellor, claimed over the weekend there were indications that the country's economic downturn was coming to an end after a difficult year in 1993.

In an interview with the Frankfurter Allgemeine Zeitung, Mr Kohl said there were 'several good signs' suggesting that 'we would come out of the decline' in 1994.

Pointing to the recovery in the US and other economies and to the optimistic mood on the German stock market, he claimed there was a 'good chance' that the German inflation rate will sink sharply below 4 per cent.

However, this improvement in the economic fundamentals would take time to work its way through to the job market in Germany, and therefore the battle against unemployment and for job creation was crucial.

Chancellor Kohl described 1993 as a particularly difficult year for Germany.

'The recession mercilessly laid bare structural weaknesses. As an exporting country we have become too expensive through high wage levels,' he said.

But he added that economic difficulties could not be attributed solely to high wages. Germany had lost ground in opening new markets and in transforming research results into new products.

By helping to achieve a world trade agreement in 1993, the German government had made a significant contribution to securing the country's future prosperity.

'The General Agreement on Tariffs and Trade accord will give Germany up to 50 billion marks ( pounds 19bn) a year in increased standard of living,' he said.

Housing construction had also improved.

'In west Germany the construction of 400,000 new flats in 1993 exceeded the former peak set in 1977. In east Germany the number of building permits doubled in 1993 over 1992,' he said.

He claimed it was important for all participants to respond to the challenge of the job market with openness and new ideas. As an example, Chancellor Kohl recommended part-time work.

Germany has the lowest percentage of part-time workers in Europe, he said. By raising that proportion to 34 per cent - the level at which it stands in the Netherlands - from the current 15 per cent, Germany could put up to 2 million more people to work.

Surveys in west German states showed that about 2 million full- time workers would be prepared to cut their hours.