German government trims 2016 growth forecast to 1.7 pct

BERLIN – The German government on Wednesday trimmed its economic growth forecast for this year to 1.7 per cent amid concerns over weakening growth abroad and global political tensions.

The figure given by the Economy Ministry was only slightly below the 1.8 per cent growth it forecast in October. According to preliminary figures released this month, Europe’s biggest economy expanded by 1.7 per cent last year.

The ministry predicted that the unemployment rate will average 6.4 per cent this year, the same as in 2015.

Earlier Wednesday, a separate survey showed that German consumer confidence remains stable despite concerns about the massive influx of migrants and recent terrorist attacks in Paris.

The GfK research group said its forward-looking consumer climate index for February was unchanged at 9.4 points. It said consumers’ willingness to buy and economic expectations rose slightly, while their income expectations dropped.

“Despite a number of risks, including the threat of terrorist attacks and the refugee crisis, consumers still believe that the German economy will continue to grow modestly in the next few months,” it said, though it warned that if risks persist, the climate could change.

The GfK said optimism can largely be attributed to “the extremely strong labour market and rising employment.”

Its monthly survey is based on some 2,000 consumer interviews.