World Economy

Germany Trims Growth Outlook

Germany Trims Growth OutlookGermany Trims Growth Outlook

The German government Wednesday slightly trimmed its 2015 growth forecast due to the slowdown in emerging economies, but said domestic consumption would likely more than offset the external weakness.

Output growth was now expected to reach 1.7% for 2015, and 1.8% for 2016, said Economy Minister Sigmar Gabriel, who six months ago had predicted growth for both years at 1.8%, AFP reported.

Gabriel said the German economy was expected to power ahead as strong domestic consumption outweighs "gloomier global growth outlook due to slowing growth in China and in raw materials-rich emerging countries."

However, "the biggest challenge for Germany is the high numbers of refugees migrating here from crisis zones," said Gabriel, who is also vice chancellor.

Germany is expecting to host between 800,000 and 1 million new arrivals this year as local authorities are struggling to cope with the sudden surge.

But the government has said its economy is solid enough to absorb the newcomers. Gabriel outlined strong economic fundamentals, with wages expected to rise 2.6% this year and 2.4% next year.

Unemployment is expected to fall this year by 98,000 from 6.4% in September, the lowest level since German reunification in 1990. Next year, despite the massive migrant influx, the forecast is for unemployment to rise only by 60,000.