German Government Raises Growth Projection for 2017

By Nina Adam Features Dow Jones Newswires

The German government slightly raised its economic growth projection for 2017 on Wednesday and forecast a reduction in the country's big foreign surplus.

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Europe's biggest economy is expected to expand by 1.5% this year and 1.6% in 2018, according to Economics Minister Brigitte Zypries. Back in January, the government projected 1.4% growth in 2017.

Ms. Zypries said the German economy remained on a solid growth path despite global uncertainties, with robust jobs creation supporting domestic demand.

Speaking at a media conference, she said the government has launched a range of measures aimed at stimulating domestic demand and imports.

Higher investment and the introduction of a minimum wage have helped limit the country's huge current account surplus, she added.

The U.S.'s Trump administration has criticised Germany's big foreign surpluses, saying the country is exploiting its trading relationships at the expense of America.

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On Wednesday, Ms. Zypries signaled that a lower current account surplus of about 4% of gross domestic product would be reasonable for Germany.

"We will have to lower the surplus a bit more," she said.

The German government forecasts a reduction in the surplus from 8.3% in 2016 to 7.3% of GDP in 2018--which would still be high by international standards. The U.S. Treasury targets a 3%-of-GDP rate when it assesses the exchange-rate policies of major trade partners in its biannual currency report.

German Chancellor Angela Merkel's conservative parties hope to benefit from the country's strong economic track record in elections this September.

Berlin-based think tank DIW was upbeat about Germany's growth prospects on Wednesday, pointing to solid industrial orders data.

"Industrial production has picked up notably since the beginning of the year and business sentiment is extremely good," DIW economist Ferdinand Fichtner said.

-Write to Nina Adam at nina.adam@wsj.com

(END) Dow Jones Newswires

April 26, 2017 09:03 ET (13:03 GMT)