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Ifo forecasts economic growth for Germany for 2016 to 1.9 pct

Xinhua, December 10, 2015 Adjust font size:

The Ifo institute announced here on Wednesday its forecast in economic output growth for Germany for 2016 and 2017 is 1.9 percent and 1.7 percent respectively.

According to Ifo, its researchers expected previously in the summer that the growth for 2016 would be 1.8 percent.

"The upturn in the German economy is continuing," said Ifo president Hans-Werner Sinn.

"Private consumption continues to drive the upturn, since the income outlook of private households remains good due to further improvements in the labor market. This effect is compounded by higher, credit-financed government spending on refugees, which is creating a temporary uptick in demand at the expense of future demand," Sinn added.

In addition, the working population will grow from 43.0 million people this year to 43.4 million in 2016 and 43.6 million in 2017. The unemployment rate will remain stable at 6.4 percent in 2015 and 2016, but will rise to 7.1 percent in 2017, the Munich-based think tank reported.

Meanwhile, the inflation rate will rise from 0.3 percent this year to 1.0 percent next year and 1.5 percent in 2017.

According to the report, expenditure on refugees and a small-scale tax reform will melt away the German government's budget surplus.

Ifo is one of Europe's leading research institutes. Its business climate index is considered among the most important barometers for German economy. Endit