External risks for the economy haveincreased, but growth of two to 2.5 pct this year is still
possible, according to President of the West German Federation
of Banks, Hanns Christian Schroeder-Hohenwarth.
    Schroeder-Hohenwarth told a news conference the further
fall of the dollar since the start of this year and the
revaluation of the mark against European currencies meant West
German exporters were facing a "rough wind."
    However, domestic demand was continuing to rise and private
consumption in particular would support the economy, he said.
He saw good prospects for consumer industries.
    Schroeder-Hohenwarth said economic policy now had to
concentrate on strengthening this domestic growth. In this
context, he welcomed a decision by the government to increase
the scope of tax cuts due in 1988.
    He added, a planned reform of the fiscal system scheduled
for 1990, which was worked out by coalition partners this
month, was an "important step in the right direction."
    The government plans to cut corporation tax to 50 pct from
56 pct. However, Schroeder-Hohenwarth said the decision to cut
the maximum rate of income tax to only 53 pct from 56 pct was
"rather half-hearted."
 REUTER
