Germany gives big boost to 2017 growth outlook

The German government on Oct. 11 gave a substantial lift to its economic growth forecast for 2017, saying it now expects 2 percent expansion rather than the 1.5 percent predicted in April.

Berlin’s sunnier outlook for the remainder of the year was based on “a broad-based recovery with a solid foundation in the domestic economy”, the Economy Ministry said in a statement.

And faster growth in the world economy and international trade should favor export powerhouse Germany, it added.

Looking ahead to 2018, the ministry lifted its growth projection to 1.9 percent, up from 1.6 percent.

The government economists see little slack in the German economy, with companies using a high proportion of their capacity, unemployment remaining at historic lows and inflation stable.

The Oct. 11 expectations upgrade from Berlin comes hard on the heels of a similar boost from the International Monetary Fund, which also predicted the German economy would expand 2 percent.

The Washington-based fund urged Europe’s biggest economy to invest and spend more of the proceeds of its growth at home to boost the economies of neighbors in the 19-nation eurozone.

But Germany’s next government looks set to be dominated by fiscal conservatives following elections in September, as Chancellor Angela Merkel’s center-right Christian Democrats open coalition talks with the pro-business Free Democrats and the environmentalist Greens.