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German growth to hold steady in 2018
Last Updated: 2018-09-07 10:40 | Xinhua
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Economic growth in Germany will hold steady throughout the remainder of 2018, according to traditional autumn forecasts which were published on Thursday by leading research institutes in the country.

The Halle Institute for Economic Research (IWH) highlighted that while the pace of expansion had slowed slightly in the Eurozone during recent months, strong global growth continued to benefit the export-oriented German manufacturing industry. "According to our current forecast, German gross domestic product (GDP) will expand by 1.8 percent in 2018 and hence come in only slightly weaker than during the previous year", a statement by IWH vice president Oliver Holtemoeller read.

The IWH further expects Germany's total budget surplus to remain unusually high in 2018 at 1.8 percent of GDP. At the same time, however, the institute warned against an increasing East-West divide, as well as risks posed by global trade conflicts, a potential disorderly exit of the United Kingdom from the European Union (EU) and fiscal policies of the new Italian government which could provoke a sovereign debt crisis in the Eurozone country.

"The faith of financial markets in the solvency of the Italian state could erode further if the government goes ahead with its financial policy proposals", Holtemoeller warned.

The Berlin-based German Institute for Economic Research (DIW) predicted a 1.8 percent GDP growth rate as well, lowering its earlier forecast (1.9 percent) slightly. Nevertheless, Claus Michelsen, head of the DIW growth division, emphasized that the momentum of the Eurozone's largest economy remained strong in spite of the revision. Although investment by companies had slowed in light of trade-related uncertainty, there was still "no sign of a collapse" in GDP growth.

The DIW anticipates that the number of employed inhabitants in Germany will rise by a further 1.1 million between 2020 and 2017, while record unemployment low falls again by 430,000 to 2.1 million. Similar to the IWH, the institute predicted another record government surplus of 60 billion euros in 2018 but cautioned Berlin against irresponsible uses of this windfall.

The Ifo Institute for Economic Research (Ifo) was more upbeat in its assessment of the German economy's prospects for 2018 than the IWH and DIW. The Munich-based researchers raised their forecast for GDP growth both 2018 and 2019 to 1.9 percent from 1.8 percent earlier.

Ifo believes that the number of employed inhabitants will continue to rise from 44.9 million in 2018 to 45.4 million in 2019 and 45.8 million in 2020. During the same period, the official unemployment rate in Germany is predicted to fall from 5.2 to 4.7 percent.

Additionally, Ifo argued that "favorable financing conditions" and high demand faced by many German companies meant that a further increase in national productive capacities was likely. Risks which could undermine this trend were identified in the protectionist "America First" trade policies of U.S. president Donald Trump, and a chaotic Brexit of the United Kingdom.

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