Reuters reported, according to a document they obtained, German government slashed growth forecast for both 2018 and 2019 in the update to be released tomorrow. Growth is now projected to be at 1.8% in both 2018 and 2019, down from prior projections of 2.3% and 2.1% respectively. For 2020, growth is expected to be unchanged at 1.8%. Weak global trade, lowered state consumption and softer auto sector are the causes for slower than expected growth.
Inflation is projected to be at 1.9% in 2018 and rise further to 2.0% in 2019. The document also noted that “in view of the strong expansion of disposable income and moderate inflation, private consumption is likely to pick up noticeably.” House hold spending is expected to grow 1.6% in 2018 and 2.0% in 2019. State consumption is projected to grow 1.4% in 2018 and 2.5% in 2019. State investment is project to rise 5.9% in 2018 and 5.2% in 2019.
According to IMF’s latest forecasts released earlier this week, German growth is projected at 1.9% in 2018 and 1.9% in 2019, revised down from April forecasts of 2.5% and 2.0% respectively.