BERLIN, Apr 10 (AFP): Germany's leading economic think tanks on Thursday raised their growth forecast for Europe's top economy this year and next year, but warned of headwinds from new government policies.
The four institutes predicted that the German economy would expand by 1.9 per cent in 2014.
That would mark a big increase from 0.4 per cent in 2013, and then it would grow by 2.0 per cent in 2015, they said.
"In spring 2014, the German economy is on an upturn. Domestic demand is the main growth engine," the institutes-Ifo in Munich, DIW in Berlin, IW in Halle and RWI in Essen-wrote in their spring report.
The 2014 growth forecast is fractionally more optimistic than the institutes' previous prognosis of 1.8 per cent from last autumn.
The government is pencilling in growth of 1.8 per cent for this year, while both the German central bank or Bundesbank and the International Monetary Fund are expecting growth of 1.7 per cent.
"For more than a year now, output has been on the up, employment growth is accelerating and sentiment among consumers and businesses is improving sharply," the institutes wrote.
"Momentum will remain high in 2015," they said.
Nevertheless, the think-tanks were critical of new economic policies drawn up by the new left-right coalition government under Chancellor Angela Merkel.
"Economic policy will provide headwind for growth," they complained, describing the decision to lower the retirement age to 63 in certain cases as a "step in the wrong direction."
German institutes more optimistic on growth outlook
FE Team | Published: April 11, 2014 00:00:00 | Updated: November 30, 2026 06:01:00
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