German government advisers trim economic growth forecast
The German government’s independent panel of economic advisers has trimmed its growth forecast for this year to 1.5 percent, pointing Wednesday to growing risks to exports.
The forecast compared with the panel’s 1.6 percent forecast made in November for growth in Europe’s biggest economy. For 2017, it is predicting growth of 1.6 percent.
The revision is “due to somewhat weaker external demand,” the economists said in a statement.
They identified global economic risks including “the potential for a more pronounced economic slowdown in China and other emerging markets,” financial market turmoil, “increased geopolitical conflict,” a flare-up of the euro crisis and Britain’s referendum on whether to stay in the European Union.
However, they also said there is potential for stronger-than-expected growth in “Anglo-Saxon countries.”
The German economy, Europe’s biggest, grew by 1.7 percent last year. It is traditionally export-heavy but lately has been fueled increasingly by domestic demand.
The government itself is forecasting growth of 1.7 percent this year. That prediction dates back to late January.
The economy’s solid performance has boosted the government’s tax income and allowed it to run a surplus at a time when other countries in Europe have sizeable deficits.
On Wednesday, Chancellor Angela Merkel’s Cabinet approved a budget plan that foresees new borrowing remaining at zero through 2020. It calls for spending to increase to 325.5 billion euros ($365.5 billion) in 2017 from 316.9 billion euros this year, a 2.7 percent rise.
Source: AssocietedPress
