German economic experts lower 2015 forecast amid sluggish world growth; exports down in August

BERLIN – A group of German economic think-tanks lowered their 2015 growth forecast for the country’s economy on Thursday, pointing to sluggish global expansion.

The group of four institutes said they expect Europe’s biggest economy to grow by 1.8 per cent this year — down from the 2.1 per cent prediction in April. They left their forecast for 2016 unchanged at 1.8 per cent.

Despite the downgrade, Germany’s economy is set to grow faster this year than the 1.6 per cent it recorded last year. Growth is being driven by private consumption and a gradual pickup in investment, the institutes said.

The export outlook is less upbeat, though, and for an economy hugely reliant on selling its goods and services abroad that is a problem.

The institutes said exports will gain only slightly this year and next as a result of the “moderate expansion of the global economy” and the gradual ebbing of the effect of a cheaper euro — the fall in Europe’s single currency over the past year or so has been a potential boon to German exports.

Germany’s unemployment rate should drop from an average 6.7 per cent in 2014 to 6.4 per cent this year, before ticking up to 6.5 per cent next year as a result of asylum seekers who have arrived in recent months seeking jobs, the think-tanks said.

Ahead of the group’s forecast, official figures Thursday showed that German exports dropped 5.2 per cent in August from the month before. Despite the decline, the Federal Statistical Office said exports were 5 per cent higher than a year earlier.

The agency said imports fell a monthly 3.1 per cent and that as a result Germany’s trade surplus narrowed to 19.6 billion euros ($22.1 billion euros) from 22.8 billion euros. The figures follow disappointing August factory orders and industrial production figures.

ING-DiBa economist Carsten Brzeski said there was “no reason to panic” and pointed to large export and industrial production declines in the same month last year as a result of the timing of summer vacations. The German economy “should rebound” in September, he said.