Germany, France central banks cut growth forecasts
AFP
AFP, BERLIN: Germany will grow at a slightly slower pace than previously expected, its powerful central bank predicted yesterday as it cut its forecasts for Europes top economy. The central bank of neighbouring France also turned more pessimistic on the growth outlook for the eurozones second-biggest economy. The Bundesbank said the powerhouse German economy would expand by 1.7 per cent this year, slowing to 1.4 per cent in 2017. This was a downgrade of previous forecasts of 1.8 per cent and 1.7 per cent respectively. Nevertheless, the banks head, Jens Weidmann, said the German economy stood on a relatively firm footing. The bank said it expected the economy to grow by 1.8 per cent in 2018.
Exports, long the bedrock of the German economy, are only providing a limited push but should pick up in coming years, Weidmann predicted. The latest forecast brings the central bank into line with the German governments 2016 forecast, which is slightly more optimistic than the Inter-national Monetary Fund with a 1.5 per cent growth estimate and German economics institutes which expect 1.6 per cent. Inflation is expected to remain subdued this year, the Bundesbank said, with consumer prices rising by just 0.2 percent, accelerating to 1.5 per cent next year and 1.7 per cent in 2018. The Bank of France, also on Friday, reiterated its earlier 1.4 per cent French growth forecast for this year, but cut its outlook for 2017 to 1.5 per cent from 1.6 per cent earlier. Growth of 1.6 per cent would now only be achieved in 2018, it said.
