Ifo lifts German growth forecast

German think tank ifo institute has lifted the 2016 growth forecast for the German economy from 1.8% to 1.9%, identifying domestic consumption of key driver of growth.

According to the ifo institute, the combination of low commodity prices, increased public spending due to the refugee crisis as well as beneficial tax effects have had a positive impact on consumption in Germany.

Despite a relatively stable global economic climate, the ifo institute predicts German imports to grow at a faster rate than exports.

The institute predicts that world trade is set to expand by 3.3% in 2016, rising to 4.2% in 2017.

According to the ifo institute, the main risk factors for the year ahead include the growing geopolitical tension in the Middle East as a result of Western intervention in Syria, which could lead to a sudden rise in oil prices, the impact of Fed tightening as well as likely expansion of ECB expansionary monetary policy.

Mona Dohle
Mona Dohle speaks German and Dutch and is DACH & Benelux Correspondent for InvestmentEurope.

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