German export growth will cool significantly next year, hampered by a slowdown in the global economy, a stronger euro and rising borrowing costs at home, the BGA exporters’ association said.

BGA president Anton Boerner said in Berlin he expected global growth to slow appreciably next year and by the end of 2007 the European Central Bank’s main lending rate should be at 4.0 per cent compared with 3.0 per cent at present. At the same time, he predicted the euro would appreciate strongly against the dollar to trade at between $1.40 and $1.44 by the end of 2007 compared with around $1.27 now.   Nevertheless, he said German firms would not suffer unduly from such an exchange rate, provided they were able to plan for it in advance and were not hit by unexpected shocks.
In 2007, the BGA expects Germany, which has been the world’s biggest exporter of goods for the past three years, to notch up export growth of around 10 per cent.
“There will be significantly less than 10 per cent in 2007,” Boerner told reporters, without making a precise forecast.
 Boerner said he now expected the German economy to grow by 1.8 per cent this year, revising up an earlier forecast of 1.5 per cent. This would be the strongest growth since 2000.
Yet with the government planning a three percentage point increase in value added tax (VAT) next year — a move analysts say will hit the domestic economy hard — Boerner said German growth would slow to 1.2 per cent at best in 2007.
“The biggest dampener for the German economy in 2007 is home made and comes from finance policy,” Boerner said.
“The burden on citizens and firms from taxes and levies will increase noticeably due to the sales tax increase and rising pension and health insurance contributions,” he added.