BERLIN (Reuters) – A favorable business environment should support Germany’s economic upswing for the remainder of this year, the finance ministry said in its monthly report for May on Friday, despite some recent signs of growth softening.
The ministry repeated the government’s growth forecasts, revised up last month, for the economy to expand by 1.8 percent in real terms this year and next as increased domestic demand replaces exports as the main driver of Europe’s largest economy.
“The favorable macroeconomic conditions, like the brightening outlook for business domestically and abroad, low interest rates and continued low prices for energy products, point towards a continuation of the economic upswing in the remainder of the year,” the ministry said in the report.
German growth slowed to 0.3 percent on the quarter in the first three months of 2015, after a 0.7 percent expansion in the final quarter of 2014. Foreign trade weighed on the economy in the January to March period.
The ministry’s upbeat economic assessment came despite two surveys this week suggesting growth may be slowing.
The mood among German analysts and investors deteriorated more sharply than expected this month, ZEW think tank’s economic sentiment survey showed on Tuesday.
On Thursday, a survey of purchasing managers showed the expansion of Germany’s private sector slowed for the second consecutive month in May.
(Writing by Paul Carrel; Editing by Hugh Lawson)