MW: Germany expects economy to grow faster in 2018
BERLIN--The German government forecasts the country's economic growth to accelerate next year thanks to a strong domestic economy, according to the 2018 draft budget seen by The Wall Street Journal on Tuesday.
In its draft, which is set to be approved by cabinet on Wednesday, the government predicts growth of 1.6% for 2018 after an expected 1.4% growth for this year.
The government is due next month to present its spring growth outlook, where it usually presents a forecast for the following year.
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"The main driving force will continue to be the domestic economy," the draft budget says. "Private consumer spending benefits from continuing income and employment growth. Public consumption is expected to continue provide growth incentives due to expenditure dealing with refugee migration and due to a additional coverage from the (state) nursing insurance."
Germany's next government, which will take office after the Sept. 24 general election, can afford only a moderate spending increase next year if it wants to keep the budget balanced, according to the draft budget.
Chancellor Angela Merkel's government has posted balanced budgets or even surpluses since 2014 and plans to keep this goal through to 2021.
The proposed budget, which will be revised by the next government, plans to raise spending by just 1.9% to 335.5 billion euros ($378.71 billion) in 2018, following this year's planned 3.7% rise to EUR329.1 billion on overall spending.
The draft budget said the next government would have to cut spending in some areas by a total of EUR4.9 billion in 2018 if it wanted to maintain a balanced budget.
Total federal spending is forecast to reach EUR347.3 billion in 2019, EUR348.4 billion in 2020 and EUR355.6 billion in 2021.
The government forecasts Germany's overall debt to fall to below 60% of GDP in 2020 from 68.2% last year, a level sought under European Union budget rules.