Economic institutes raise German growth forecasts: sources

FILE PHOTO: A woman carries her shopping bags in downtown Hamburg
FILE PHOTO: A woman carries her shopping bags in downtown Hamburg, Germany, January 25, 2018. REUTERS/Fabian Bimmer/File Photo

April 17, 2018

By Rene Wagner

BERLIN (Reuters) – Germany’s leading economic institutes have raised their growth forecast for Europe’s largest economy to 2.2 percent this year from a previous estimate of 2 percent, two sources familiar with the deliberations told Reuters on Tuesday

The institutes also expect the economy to grow by 2 percent in 2019, up from 1.8 percent previously.

The German government relies on the forecasts of the institutes to calculate its own growth estimates. The institutes will announce their revised growth figures on Thursday.

The sources said the institutes had initially estimated the economy would grow by 2.4 percent this year but went for the lower estimate of 2.2 percent after weak economic data in the first quarter.

German industrial orders fell in January and rose by 0.3 percent in February amid weak domestic demand. Industrial output fell the most in more than two years in February, as industry lost some of its momentum in the face of the rising threat of protectionism.

Adding to signs that the economy was losing steam, exports fell unexpectedly in February, posting their biggest monthly drop in two years and narrowing Germany’s trade surplus.

Despite the weak data, economists and the government expect the economy to rebound in the spring.

Buoyant tax revenues, a record budget surplus, falling unemployment and low borrowing costs have fueled a consumer upswing in Germany, which registered 2.2 percent economic growth last year.

(Writing by Joseph Nasr; Editing by David Goodman)

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