The German government has raised its 2017 growth forecast for Europe's biggest economy to 2.0 percent, a sharp increase from its earlier estimate of 1.5 percent and the strongest rate since 2011. David Pollard reports
Think German economy, and most think big brand exports and bumper trade surpluses. But that is changing, according to its economy ministry. This year, exports may even account for less than imports, it says. Though growth, that's still on its way up. As robust domestic consumption takes over. (SOUNDBITE) (German) GERMAN ECONOMY MINISTER BRIGITTE ZYPRIES, SAYING: "Investment activity and employment have developed more dynamically than we expected in the spring. Strong domestic demand has contributed to this. We also have an upturn in the euro zone." Europe's largest economy now seen expanding by two per cent this year - that would be the best rate in six years - against a previous forecast of 1.5. With next year, 1.9 per cent pencilled. As for risks: they could still come from protectionism and geopolitical conflict. Brexit, it says, could hurt Britain more. (SOUNDBITE) (German) GERMAN ECONOMY MINISTER BRIGITTE ZYPRIES, SAYING: "We have already noticed a number of relocations from companies out of Great Britain to Germany where they are now setting up their headquarters." But another threat could come from the EU itself. The warning this time from Germany's IFO institute. (SOUNDBITE) (German) HEAD OF GERMANY'S IFO ECONOMIC INSTITUTE, CLEMENS FUEST, SAYING: "Euro parliament, euro zone budget, European finance minister - all those things won't solve the problems of the euro zone but rather aggravate them. ..... If we look at what happened in Catalonia, we get a taste of what threatens the euro zone should we turn this currency union into a so-called transfer union: small and wealthy countries will say 'goodbye'." Low borrowing costs may keep the economy on track. Even as many in Germany call for the ECB to ease back on stimulus. Though that could still be difficult amid low inflation rates. The ministry giving a 1.8 per cent estimate for this year - just 1.6 for next.