Frankfurt / AFP
Global uncertainties will shave around 0.1 percentage point off growth in Germany this year, but Europeâ€™s economic powerhouse remains in a moderate uptrend, an expert panel said on Wednesday.
The German Council of Economic Experts, known as the five â€œwise menâ€, said it is forecasting gross domestic product (GDP) growth of 1.5 percent this year â€” fractionally lower than their previous prognosis from last Novemberâ€”and 1.6 percent growth in 2017.
â€œIn view of the slightly weaker external economic environment, our previous forecast for 2016 has been revised downward slightly,â€ the economists said.
Nevertheless, â€œthe moderate uptrend is continuing, driven by domestic consumer spending,â€ insisted the panel, which is actually made up of four men and one woman.
The labour market remained robust, fiscal policy was expansive and monetary policy was â€œextremely accommodative,â€ the experts said.
â€œThe turbulence seen in the international financial markets at the beginning of the year does not point to a global economic contraction,â€ the panel continued.
The sharp drop in financial markets in January was largely due to a decline in banking stocks reflected investor concern about banksâ€™ profitability, the experts said.
The massive influx of refugees remains a â€œhuge challengeâ€ for German economic policy, the panel said.
Bottlenecks in the asylum application process were currently leading to delays in integrating the newcomers into the labour market and that meant the huge numbers of new arrivals were not pushing up the headline jobless rate for the time being.