Germany raises 2017 growth forecast to 1.5 percent

Markets Associated Press

The German government slightly raised its growth forecast this year for the country's economy, Europe's biggest, to 1.5 percent on Wednesday. It predicted that the economy will expand by 1.6 percent in 2018.

Continue Reading Below

The government had forecast in January that gross domestic product would grow by 1.4 percent this year following last year's 1.9 percent expansion. This year's growth is expected to be lower because more public holidays fall on weekdays.

The government's panel of independent economic advisers last month forecast growth of 1.4 percent this year and 1.6 percent in 2018.

Economy Minister Brigitte Zypries said that "international risks are affecting the German economy relatively little" since domestic demand has strengthened over recent years, with Germans now somewhat more willing to spend.

Uncertainty remains over the consequences of Britain's exit from the European Union and "the economic policy course in the U.S. has not yet finally been determined," Zypries said. "A lot of our companies still don't know exactly what is coming."

President Donald Trump has promised to release the outlines of his tax plans Wednesday. It is unclear whether he favors a border adjustment tax system, which would lower corporate rates to 20 percent by essentially taxing imports and excluding U.S. exports.

Continue Reading Below

"We assume, and also have signals from the United States, that the border adjustment tax probably won't come," Zypries said, though she stressed that officials won't know more until Trump speaks.