Higher exports seen lifting German growth, investments

German Economy Minister Zypries addresses a news conference to introduce the government's economic spring outlook in Berlin

By Joseph Nasr

BERLIN (Reuters) – Germany is on a solid economic growth path despite global uncertainties, Economy Minister Brigitte Zypries said on Wednesday, adding that she expects companies to start investing more as exports gradually grow.

She spoke as the German government raised its growth forecast for this year to 1.5 percent from a previous estimate of 1.4 percent. It maintained its forecast for 2018 growth at 1.6 percent.

Zypries said that the booming construction sector, helped by a low interest rate environment created by the European Central Bank as well government investments in infrastructure, was providing a strong impulse for the economy.

The ECB’s expansive policy has helped revive the euro zone economy. It has also particularly helped boost private consumption in Germany, which is one of three main growth drivers alongside construction and increased state spending.

The ECB meets in Thursday and is expected to keep policy unchanged. Sources told Reuters this week, however, that many ECB ratesetters see scope for sending a small signal in June toward reducing monetary stimulus.

Zypries said the German economy appears to be shrugging off uncertainties linked to Britain’s vote to leave the European Union, protectionist policies in the United States, China’s push for more new-energy vehicles, and political risks in Turkey.

She said that the good shape of the world economy, which is expected to grow 3.5 percent this year, would lift German exports and encourage export-oriented German firms to invest.

“We know that uncertainties hamper investments and this is totally understandable but not good,” Zypries said. “Therefore we need to ensure that the world economic environment improves and that fair and free trade bring about better growth and living standards.”

Zypries said that Germany’s high current account surplus, which has been criticized by the United States, the International Monetary Fund and European Commission, would fall from 8.3 percent of output in 2016 to 7.3 percent next year.

“The current account surplus should fall … not least because of solid domestic consumption and higher crude oil pric

es,” the ministry said in a statement.

(Graphic by Jeremy Gaunt; Editing by Madeline Chambers/Jeremy Gaunt)