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January 26, 2017

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Germany keeps growth outlook for 2017

THE German government yesterday maintained its growth forecast for 2017, even as a monthly survey showed firms increasingly nervous about the future in the face of global uncertainty.

Europe’s largest economy should expand by 1.4 percent in 2017 after hitting 1.9 percent last year, the economy ministry in Berlin said in a statement.

“The German economy is in very good condition,” said Economy Minister Sigmar Gabriel, adding that “the effect of a lower number of working days” compared with last year would account for most of the slowdown in growth.

But he acknowledged that “despite the extremely good economic situation, many people are concerned” about their own and the country’s prospects.

Earlier in the day, a survey from the Munich-based Ifo institute showed business confidence at its lowest level since September.

The Ifo index was at 109.8 points in January, down 1.2 points after months trending upward.

Analysts surveyed by Factset had predicted a slight increase to 111.3 points.

“Companies expressed greater satisfaction with their current business situation, but are less optimistic about their six-month business outlook,” Ifo President Clemens Fuest said in a statement.

Analyst Carsten Brzeski of ING Diba bank wrote that “Germany is getting increasingly concerned about the possible impact from US President Trump’s suggested trade sanctions.”

The US dislodged France as Germany’s biggest export customer for the first time in many years in 2015, he noted.

According to the federal statistics office Destatis, Germany sold 174 billion euros (US$187 billion) of goods to the US in 2015, while importing 60 billion euros of American goods.

Combined with the threat to German exports from Britain’s decision to quit the European Union, Brzeski said “the German economy will continue to be highly dependent on domestic demand” in the year ahead.

Trump claims that competition from foreign imports destroys jobs in the US, and this week ditched plans for a free trade area stretching across the Pacific Ocean.

He also used an interview with British and German newspapers ahead of his inauguration to attack BMW over its plans to open a new plant in Mexico.


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