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Roundup: Leading economic institutes raise German growth outlook

Xinhua, April 12, 2017 Adjust font size:

Five leading economic institutes raised their joint growth outlook for Germany on Wednesday, saying the European largest economy would expand faster than last autumn's forecast despite external risks.

The German institutes latest outlook expects Germany's gross domestic product (GDP) to grow 1.5 percent in 2017 and 1.8 percent in 2018.

The previous forecasts were 1.4 percent and 1.6 percent, respectively.

The economic think tanks explained that German economic growth has so far more strongly driven by the expansion of domestic consumption rather than investment and foreign trade.

They added that Germany's jobless rate would decline to 5.7 percent this year, and further down to 5.4 percent next year.

But in the Joint Economic Forecast Spring 2017 report, the institutes didn't turn a blind eye to external uncertainties that cloud German economy.

They said Brexit negotiation and possible protectionist policies by the United States posed risks on German economic outlook.

The forecast about the impact of the new U.S. government's economic policies on the world economics is unclear, said the report which was published twice a year on behalf of the German Federal Ministry for Economic Affairs and Energy.

Another cause for uncertainty is the effect of political developments in Europe. The impact of Brexit and the course of the negotiations remained unclear.

The economists also warned that a spike in inflation rate could damper consumer spending.

They predicted that Germany's consumer prices would rise 1.8 percent this year and 1.7 percent next year, after an increase of only 0.5 percent in 2016.

The researchers suggested a change of the economic policy to improve the framework for private domestic investment and to counter the upward trending tax burden that now exceeds 40 percent of GDP.

They also called for economic policy to take long-term measures to decrease the impact of Germany's aging population which will drive up pension scheme contributions. Endit