The German business sector is the main driver of the country’s economy solid growth. The strong expansion during the winter in the federal republic is expected to continue in the second quarter, according to the predictions of the central bank in its monthly report.
“The upward trend is mainly driven by vital industrial activity”, wrote the analysts. They also state that the sector is encouraged by both domestic and foreign demand. “Due to the very good conditions of the labor market, the private consumption, along with demand and investment in residential properties, are taking care of the steady pace of growth”, the report said.
According to the German Central Bank, the fundamentals of a really strong economic dynamics are emerging in the upward direction. The Bundesbank predicts annual GDP growth of 1.9% this year, 1.7% in 2018, and 1.6% in 2019.
The inflation is expected to accelerate this year due to rising oil and food prices. The harmonized index of consumer prices, which is calculated for the needs of the European institutions, is expected to increase from 0.4% last year to 1.5% in 2017. In 2018 and 2019, annual inflation is expected to Accelerated to 1.4% and 1.8% respectively.
The German Central Bank predicts that government finances will remain stable. If there are no major policy changes, a budget surplus is expected over the projected period. Cost policy remains expansive, says the report of the bank said. In addition, experts believe that public debt in 2019 will fall below 60% of GDP, which would happen for the first time since 2002.