GERMAN RESEARCH INSTITUTE LOWERS GROWTH FORECAST

  The DIW economic research institute
  said West German economic growth in 1987 is unlikely to reach
  the 1.5 pct rate it had forecast earlier this year.
      The institute, whose forecasts are more pessimistic than
  those of the other four leading German institutes, said the
  economy had passed its peak in the summer of 1986, and its
  prospects had dimmed significantly since the autumn.
      The DIW repeated earlier predictions that gross national
  product (GNP) in the first quarter of 1987 would contract in
  real, seasonally adjusted terms against the weak final quarter
  of last year. 
      The DIW said that even if the economy recovers in the
  remaining three quarters, it was unlikely that demand and
  production would rise strongly enough to bring GNP growth up to
  1.5 pct.
      Other institutes and economists have recently revised their
  forecasts for German 1987 growth to around two pct.
      In a report DIW disputed arguments by other economists that
  the economy was showing mixed development, with domestic demand
  healthy but foreign demand weak.
      DIW said the crucial split was between weak demand for
  capital goods, and strong demand for buildings and consumer
  goods, not between foreign and domestic demand.
      It noted that domestic demand for capital goods had been
  hit in recent months by the weakness of exports, which had
  caused West German firms to scale back investment plans.
      Service industries, unlike manufacturing industry, were
  continuing to do well because they relied on consumer demand,
  it said.
      In a separate report the HWWA economic research institute
  in Hamburg said West Germany's real trade surplus would fall
  markedly this year.
      However, the nominal trade surplus would show little change
  from 1986's record 112.2 billion marks because of a further
  improvement in the terms of trade on average in 1987 compared
  with 1986, it said.
  

