German Economic Ministry confirms 2017 GDP forecast at 1.4 pct

In a latest forecast presented by Economy Minister Sigmar Gabriel to Chancellor Angela Merkel's cabinet on Wednesday, the German government left its 2017 forecast for economic growth unchanged at 1.4 percent despite uncertainties surrounding the policies of U.S. President Donald Trump. Export growth forecast for 2017 was raised to 2.8 percent from a previous estimate of 2.1 percent.

Germany’s economy grew strongly in 2016, propelled by a buoyant labor market and a pickup in government spending. Europe's largest economy expanded at the fastest pace in five years in 2016, growing by 1.9 percent.

However, in October the government had lowered its 2017 forecast from 1.5 percent to 1.4 percent. In November, the government's panel of economic advisers lowered forecast to 1.3 percent from a previous estimate of 1.6 percent.

German Ifo business climate index fell unexpectedly in January and the outlook has become more uncertain. Federal elections in germany are scheduled to take place on 24 September. Increased investor concerns over political cohesion could have a significant adverse impact on the real economy. Polls indicate that Chancellor Merkel’s CDU/CSU will probably come out as the strongest party while there could be a race between social democrats (SPD) and the euro-sceptic AfD for the second place.