With the liberalization of the Crafts Code, the master craftsman diploma will only be necessary for starting a business in a limited number of crafts and trades. Dr. Barbara Henman, University of Cologne, considers this a "benefit for citizens", since in her opinion re-examining and simplifying the crafts regulations was necessary and overdue.
On 24 June 2003 the Ifo Institute held its 54th Annual Meeting in Haus der Bayerischen Wirtschaft in Munich. The public part was moderated by the chairperson of the Board of Trustees, Prof. Wilhelm Simson. Prof. Hans-Werner Sinn, President of the Ifo Institute, presented the latest Ifo economic forecast. Then, Prof. Eduardo Aninat, Deputy Managing Director of the International Monetary Fund, standing in for IMF Managing Director Dr. Horst Köhler who was called away on official business, spoke on "A Cooperative Approach to Strengthening Global Growth". The lecture and the forecast are printed in this issue. The event was continued with short presentations of selected studies by Ifo and CESifo researchers and awards for outstanding work in the past year.
W. Nierhaus, E. Hahn, O.-E. Kuntze, E. Langmantel, W. Meister and M. Meurers
World economic activity was pointed slightly upward in the early summer of 2003, but a sustainable recovery had not yet set in. Dampening factors are the Iraq crisis, the temporary surge in mineral oil prices, the outbreak of the pulmonary illness SARS as well as the persisting lull in the IT sector. In the further course of this year, a turnaround is expected and in 2004 a recovery. Since the retarding factors are waning gradually, the stimulating effect of expansive monetary policies in most countries will strengthen. Also in Germany we expect a slight increase in economic output in the second half of 2003 as a result of the gradual improvement of the international economic environment and based on the business expectations responses of the firms participating in Ifo Business Survey. Nevertheless the economy will still show stagnation, both over the course of the year and for total annual performance. On average for the coming year, the gross domestic product will expand by around 1.5%, but ½ percentage point of this growth will be due to the unusually large number of working days. The number of unemployed will rise by around 390,000 to 4.45 million for the year in 2003 and will increase in the coming year to 4.6 million. The unemployment rate - based on the whole domestic labour force - will then amount to 10.8%, the highest level since reunification. A turning point in unemployment by the end of the forecasting period is not expected. The rise in the cost of living will remain moderate; the inflation rate will be 0.9% this year and 0.8% in 2004. The budget deficit will increase this year by approximately €80 billion (3.7% of GDP); in 2004 the deficit will be an estimated €70 billion (3.2% of GDP). Germany will fail to satisfy the criteria of the EU Stability and Growth Pact for both years.
Oscar-Erich Kuntze
In Belgium the economy is currently very much the same as other western European countries. The real gross domestic product expanded by only 0.8% in 2002, slightly above the western European average. Unemployment increased perceptibly, and the unemployment rate stood at 7.3%. The inflation rate went up to 1.6% for the year. In 2003 real GDP will only grow by 0.5%, and the labour market situation will deteriorate again. The unemployment rate will increase to 8% for the year. Consumer prices will be around 1¼% above the level of the previous year. In 2004 the economy will recover gradually during the course of the year. The real gross domestic product will increase by around 1¾%. The unemployment rate will stand at 8% and the inflation rate at 1¼%.
Benefits for the disabled are of a great importance in some countries, for example in Poland, where in 1999 more than 12% of working age people received public assistance because of disablement. In Norway, the Netherlands, Sweden and Denmark the corresponding share of beneficiaries was between 7.7% and 9.2%, and in Germany it was 4.1%. Disablement serves in part as a substitute for unemployment: Disabled people reduce the economically active population and thus also the number of unemployed persons.
On the occasion of the Bayerischer Wirtschaftstag, which took place on 30 June 2003, the special award of the Wirtschaftsbeirat der Union e.V. was granted to Prof. Sinn for his contributions to the development of the social market economy in Germany. Previous award winners were Dr. Otto Wiesheu and Alois Glück. The two former winners as well as Prof. Wilhelm Simson acknowledged the merits of Prof. Sinn in their speeches. In his lecture on labour market reform, accessible under www.ifo.de, Prof. Sinn stressed the necessity to boost growth in Germany through a liberalisation of the labour market. Particularly in need of reform are collective bargaining, dismissal protection laws and the social and unemployment insurance systems.
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