German GDP growth likely to slow in Q4-Fin Min

BERLIN Nov 20 (Reuters) - German gross domestic product growth is likely to slow in the final quarter of 2009, and the euro's strength against the dollar is having a negative impact on the country's firms, the Finance Ministry said on Friday.

However, since the labour market had held up better than expected in recent months, the federal government could end up borrowing less this year than had previously been anticipated, the ministry noted in its latest monthly report.

"If the performance of the last few months continues, the 49.1 billion euro 2009 net new borrowing target ... could be significantly undershot," the ministry said in the report.

Germany exited its sharpest postwar recession in the second quarter, when GDP expanded by 0.4 percent, and the recovery gained strength in the third quarter, when Europe's largest economy grew by 0.7 percent quarter-on-quarter.

However, a further acceleration was not likely in the final three months of the year, the ministry said.

"Especially against the backdrop of falling private consumption, the pace of growth is likely to ease in the final quarter of this year," the ministry said.

Worries about job losses were likely to depress consumer spending, although private consumption -- which has been boosted by government stimulus measures like a cash-for- clunkers scheme -- would probably rise on average in 2009, it added.

The euro's strength was not making it easy for Germany's export-oriented firms to capture key markets, the ministry said.

"The euro's current exchange rate against the dollar is also tending to hurt German firms' price competitiveness," it wrote.

Construction output showed only meagre growth in the third quarter, the ministry said, but added building firms were likely to profit increasingly from stimulus measures in coming months.

(Reporting by Dave Graham)