Germany's Economic Advisers Lift Growth Projection
(RTTNews) - Germany's economy is forecast to grow at a slightly faster pace than estimated this year, the German Council of Economic Experts said Monday.
Gross domestic product is forecast to grow by calendar-adjusted 1.7 percent in 2017 instead of 1.6 percent. For 2018, the GCEE projected 1.6 percent expansion.
In real terms, the agency forecast 1.4 percent growth for 2017.
The improvement in the outlook reflects the ongoing good labor market situation and a slightly more positive expectations for the global economy, a procyclical German fiscal policy and the European Central Bank's expansive monetary policy.
The agency recommended the ECB to begin winding down it asset purchases as soon as possible as resulting risks from expansionary policy continue to grow.
Inflation is expected to accelerate to 2.2 percent this year, before slowing to 1.6 percent in 2018.
The GCEE also refutes recent criticism of Germany's large current account surplus and resulting policy recommendations.
"Although the German current account surplus is high, it does not signal a macroeconomic imbalance," Chairman of the GCEE Christoph Schmidt, said.
"The German government should improve Germany's appeal as an investment location which subsequently would contribute to reducing the surplus," said Schmidt.
The GCEE is an academic body advising German policy makers on questions of economic policy.