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GLOBAL ECONOMIC MOTOR STILL RUNNING ON ONLY THREE CYLINDERS

 GLOBAL ECONOMIC MOTOR STILL RUNNING ON ONLY THREE CYLINDERS
 FRANKFURT, May 4 /PRNewswire/ -- The world economy will not grow significantly in 1992, Deutsche Bank Research concludes in its latest version of the "G3 Issues" series, a survey of the economies of Europe, the United States and Japan. The institute reports that world economic slowdown will linger for some time, holding GNP growth in the OECD countries to about 1 percent in 1992; by 1993 some improvement should come from various stimulation and restructuring measures, with growth reaching roughly 2 percent in the OECD countries.
 In western Germany, the end of temporary income tax surcharges, among other tax measures, will increase disposable income and stimulate the economy in the second half of 1992, resulting in GNP growth slightly above 1 percent in 1992. DB Research notes that a 1 percent increase in Germany's value added tax, from 14 percent to 15 percent, will reduce domestic buying power in 1993. This will make prospects for growth dependent on the export sector at a time when the global recovery is just beginning. Consequently, Deutsche Bank Research predicts a growth rate of no more than 2.5 percent in 1993 in western Germany.
 In eastern Germany, new growth in 1992 will be driven by the construction and related sectors, as well as west German investment. GNP growth in the New Federal States should reach roughly 10 percent in 1992, rising to between 10 percent and 15 percent in 1993. Even though future east German growth rates might exceed those of western Germany by 7.5 percent, the New Federal States will have reached only 60 percent of the west German standard of living by 1992 in terms of GNP per employee.
 Compared to the more definite signs that Europe will see somewhat stronger growth by 1993, indicators on the U.S. economy continue to vary. Recent positive indicators have led to predictions of a growth rate of between 2.5 percent and 3 percent for the second half of 1992. Nevertheless, structural difficulties in the form of persistent consumer and corporate debt and the record budget deficit are likely to burden the U.S. economy for some time to come. Considering these factors, DB Research writes that expectations of 2 percent growth in the United States in 1992 may be overly optimistic.
 In Japan, consumer and investor wariness will postpone a return to the high rates of growth characterizing the 1980s, notes Deutsche Bank Research. This year's discount rate reduction had been widely anticipated and thus had little impact. In the face of continuing bankruptcies and low industrial output, a further reduction of the discount rate to 3.5 percent or 3.25 percent cannot be ruled out. Nevertheless, DB Research argues, even if the government takes such action, growth will remain weak well into fiscal 1992 and 1993.
 -0- 4/10/92
 /NOTE: For a copy of the complete text, contact Ute DeFarlo, TransAtlantic Futures, Inc., in Washington, 202-462-1222 or, fax, 202-462-1229/
 /CONTACT: Bernhard Graf, 011-49-69-7150-4735, or Hans-Jurgen Meltzer, 011-49-69-7150-4720, both of Deutsche Bank Research/ CO: Deutsche Bank Research ST: IN: FIN SU:


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Date:May 4, 1992
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