On 22 June 2004 the Ifo Institute held its 55th Annual Meeting. The official Annual General Meeting and the meeting of the Board of Trustees took place in the morning at the Haus der bayerischen Wirtschaft. The public portion in the afternoon was moved to the Aula of the Ludwig Maximilian University because of the enormous interest in the speakers. More than 800 guests, including numerous representatives of member firms of the Ifo Institute and of Bavarian and Federal ministries, intently followed the full and varied programme. After the welcoming words of Prof. Sinn and the Rector of the University, Prof. Bernd Huber, the President of the Czech Republic, Prof. Ing. Václav Klaus, spoke on EU enlargement. Following an introduction by Minister Eberhard Sinner, Prof. Sinn presented the latest Ifo economic forecast. The afternoon concluded with a panel discussion on tax reform in Germany. Moderated by Nikolaus Piper, editor of the business section of the Süddeutsche Zeitung, the participants included Prof. Paul Kirchhof, Director of the Institute for Finance and Tax Law at the University of Heidelberg, Friedrich Merz, MdB, Deputy Head of the CDU/CSU in the Bundestag, Prof. Wolfgang Wiegard, Head of the Council of German Economic Advisors and Prof. Hans-Werner Sinn. The Ifo forecast and the statements of the podium participants are published in this issue. The speech of Václav Klaus will be published in Ifo Schnelldienst 13/2004.
G. Flaig, W. Nierhaus, O.-E. Kuntze et al.
The world economy was expansive in early summer 2004. The US, Southeast Asia, Japan and - at a weaker pace - the European national economies are all experiencing an economic upswing. In the further course of this year and in 2005, the dynamics will decrease incrementally, brought on by recent price hikes for oil and raw materials. Also the stimulating effects of monetary and fiscal policy will weaken. The German economy, however, is still not in a full upswing as of mid-2004. Although economic output has been expanding since mid-2003, the situation on the labour market continues to deteriorate. The growth trend in Germany remains relatively low, in comparison with other member states of the euro area. Real GDP increased in the first half year of 2004 over the previous year by around 1.6%, according to estimates of the Ifo Institute; growth in the second quarter may have been slower than in the first quarter because of higher oil prices. In 2004 economic growth will probably amount to 1.7%. It must be taken into account, however, that approximately 0.5 percentage points of growth is due to the unusually large number of working days in 2004. The situation on the labour market will remain discouraging in the forecast period. Employment numbers may continue to decline, with a slight improvement not coming until the beginning of the year. The unemployment rate will average 10.3% for 2004 and 2005
Joachim Gürtler
According to the 37th Ifo Business Survey of EDP service providers in April and May 2004, the business climate stabilised at a comparably high level. The business situation in the first three months of 2004 was appraised by 25% of the firms as favourable, by 51% as satisfactory, and 24% felt their present situation was poor.
Oscar-Erich Kuntze
With an increase in real GDP of 0.3%, economic growth in Italy fell considerably behind expectations in 2003. The unemployment rate was 8.7% for the year. Inflation reached 2.8%. In 2004 real GDP will probably increase by around 1%. The unemployment rate will be ca. 8½% for the year, and consumer prices will be around 2½% higher than the previous year. In 2005 GDP will increase by around 2%. The unemployment rate will decrease to 8¼%, and prices increases will be around 2½%.
The enterprise database of the World Bank provides indicators by means of which the enterprise-related regulations of more than 130 countries can be compared, among other things also data and information on new business start-ups. According to this source, small and medium-sized enterprises can be set up fast and at small costs in Canada, New Zealand, Australia and in the United States, while starting a business in central and eastern European countries can be laborious and expensive. Germany occupies a mid-range position. At the beginning of 2004 a new business required nine approvals taking a total of 45 days.
Hans G. Russ
In German trade and industry, the business climate clouded over slightly in June, after having stabilised the previous month. Both the assessments of the current business situation and the business expectations worsened. Unlike the previous month, the poorer business climate is due almost exclusively to unfavourable developments in western Germany.
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