The German government slightly lowered its growth forecast yesterday to 1.7 per cent for this year, blaming an economic slowdown in China and other emerging markets, but it confirmed its prediction of a 1.8-per cent expansion next year.

In April, the government had forecast growth of 1.8 per cent for Europe’s largest economy for this year.

“The German economy is continuing to grow. It remains on track despite the subdued outlook for the global economy with weaker growth in China and commodity-rich emerging markets,” Economy Minister Sigmar Gabriel said.

Foreign trade will only make a small contribution to growth this year

The Economy Ministry estimated exports would surge by 5.4 per cent this year and by 4.2 per cent next year while imports would increase by 5.9 per cent and 5.3 per cent respectively.

That means foreign trade will only make a small contribution to growth this year. Private consumption will probably be the only pillar of support next year, the ministry said.

The ministry expects domestic demand to rise by 1.7 per cent this year and 2.1 per cent next year, compared with April’s forecasts for gains of 2.0 and 1.8 per cent respectively.

It also revised up its estimates for government spending to an increase of 2.3 per cent this year and a gain of 2.0 per cent next year, mainly due to higher spending for refugees.