FRANKFURT (AFP) — The US home loan crisis could damage German growth by pushing up the euro and crimping exports from the biggest eurozone economy, Economy Minister Michael Glos warned Wednesday in an interview.
"No one knows what the effects of the American financial crisis on Germany will be in the end," Glos told the mass circulation newspaper Bild.
"The dollar's weak level against the euro and high oil price could slow our growth, which has been strong until now," the economy minister added.
"If the dollar continues to fall, it will hamper our export perspectives," he said.
In Asian trade on Wednesday, the euro traded for 1.3976 dollars, easing off an all-time high of 1.3988 seen late Tuesday in New York after the US Federal Reserve slashed its benchmark Fed Funds interest rate to 4.75 percent.
Oil prices could hit 85 dollars a barrel meanwhile, after establishing new record levels above 82 dollars following the Fed's move to boost the struggling US economy, analysts said Wednesday.
Germany's economy relys to a large extent on exports, while consumption represents a much smaller piller of growth compared with countries like the United States.
It was not the first time that Glos voiced concern over the banking system crisis that followed the collapse of the US market for high-risk home loans, known also as the subprime market.
On Friday, he had warned that "complacency was not an option" given the shock that the US crisis dealt to international financial markets.
The government has forecast that the German economy would expand by 2.3 percent this year, while analysts at Commerzbank estimate it could reach 2.5 percent before falling back to 1.8 percent in 2008.
Copyright © 2009 AFP. All rights reserved. More »
