German exports will grow less than expected this year due to external risks, including a possible British exit from the EU, according to the head of the BGA trade association. But, as Sonia Legg reports, Germany's economic growth will expand later this year after a slower second quarter.
18 kilometres through mud and water - these Germans aren't afraid of a challenge. Like the competitors in the Tough Mudder contest, the country's economy is proving resilient. New forecasts from the Finance Ministry and the Bundesbank suggesting Germany is heading an annual growth of 1.7 percent. The second quarter will be slower than the first's 0.7 percent, but after that things will pick up. (SOUNDBITE) (English) CIBC, HEAD OF FX STRATEGY, JEREMY STRETCH, SAYING: "The labour market is proving to be remarkably strong in Germany and, in that context, it does provide a reasonably sound foundation for both German federal finances but also in terms of the German microeconomic outlook." But there are headwinds - German exports will grow less than expected this year, according to the BGA trade association. That's because of uncertainties ahead of elections in France and the U.S. And this week's British vote on EU membership, described by the association's head as "poison" for the British economy...And it's not just Britain that'll suffer. (SOUNDBITE) (English) CIBC, HEAD OF FX STRATEGY, JEREMY STRETCH, SAYING: "I think there would be a serious risk of a fall back in the global economy merely because of the risk associated, because we would be in uncharted territory in a Brexit scenario. We don't really know how the UK and euro zone economies will perform." But the strong man of Europe is clearly in robust health. German exports are still growing thanks to demand from EU countries, and consumers are spending thanks to higher wages and low interest rates. That's boosted tax revenues by 6 percent in the first five months of the year, meaning Germany can afford to spend on migrants and infrastructure, and still keep winning.