Germany trims 2015 growth outlook

The German government has trimmed its growth forecast for this year, citing weakness in China and other major emerging economies.

Record-high employment, rising wages and almost stable prices are boosting household spending while cheaper gasoline is freeing up a few cash for other purchases.

In the Autumn forecast, the economy ministry said Wednesday real gross domestic product is set to grow 1.7 percent instead of prior forecast of 1.8 percent.

The Economy Minister Sigmar Gabriel says the economy continues to grow and remains on track, despite the subdued outlook for the global economy with weaker growth in China and elsewhere.

Thank tank ZEW put its monthly measure of economic sentiment at 1.9 – a fall of 10.2 points from 12.1 in September, and the lowest level it has reached since this time a year ago.

Germany is expecting to host between 800,000 and 1 million new arrivals this year, and local authorities are struggling to cope with the sudden surge.

A survey shows investor confidence in Germany, Europe’s biggest economy, has fallen for the seventh consecutive month as concern about the fallout from the Volkswagen scandal adds to worries about weak growth in emerging economies.

Estimates of government spending meanwhile have been increased mainly due to the influx of refugees.

That means foreign trade will only make a small contribution to growth this year.

Exports are forecast to rise by 5.4 per cent this year from 4.0 per cent last year, and by 4.2 per cent in 2016.

“On this, investments in education and training are key”, said Gabriel.