Leading economic institutes raise German growth forecast

Four leading German economic institutes significantly raised their forecast for German growth this year on Thursday, citing impulses from low oil prices and a weak euro.

According to their latest forecast, the German economy would increase by 2.1 percent this year. In last October, the institutes, which include Berlin's DIW , Munich's Ifo, Essen's RWI and Halle Institute for Economic Research, only expected Europe's biggest economy to grow by 1.2 percent.

"The German economy is experiencing a strong upturn driven by unexpected expansive impulses, especially the falling oil price and the sharp depreciation of the euro," said the institutes in a joint statement.

Private consumption was seen as the main driving force as falling energy prices increased German households' purchasing power and stable labour market raised Germans' wages.

Thanks to the depreciation of euro and uptick of the euro zone's economy, German exports were expected to significantly increase this year. With a sharp increase of imports due to strong domestic demand, however, foreign trade would only make a small contribution to the economic output.

The prospect of investment was mixed. While rising exports, robust consumer demands, falling oil prices and favourable financing conditions would encourage German companies to purchase equipment, uncertainties about the global economy and the future of euro zone and the introduction of a minimum wage was also likely to hamper companies' willingness to invest.

The institutes said German employment outlook remained very favourable. The jobless rate would continue to drop to 6.3 percent this year from 6.7 percent in 2014. Endit