BERLIN, Oct 23: The German government on Thursday slashed its official growth forecasts for this year and next and warned that Germany’s public deficit was likely to remain in breach of EU limits for the third straight year in 2004 as a result.

The Economy and Labour Ministry, publishing its latest updated economic forecasts, predicted that the eurozone’s biggest economy would stagnate in 2003 and grow by 1.5-2.0 per cent in 2004.

Given the difficult economic situation in the first half of 2003, the government expects real gross domestic product growth to average zero for the whole of the year, the ministry said.

Nevertheless, important indicators have been pointing to a recovery. And for the second half of this year, the government, along with the economic institutes, is banking on a slight rise in overall economic activity.—AFP