March 21, 2018 / 9:04 AM / a month ago

German economic advisors raise growth forecast, warn of increased risks

BERLIN, March 21 (Reuters) - The panel of economic advisers to the German government on Wednesday slightly raised its growth forecast for Europe’s largest economy despite giving a stark warning that a spiral of protectionist measures could damage the robust upswing.

The five economists who advise the German government on economic policy said they expected gross domestic product (GDP) to grow by 2.3 percent this year, up 0.1 percentage points from their latest forecast in November.

For 2019, they forecast 1.8 percent economic growth.

Trade will play a slightly bigger role as a growth driver than previously expected due to a booming world economy, the panel said, adding that the European Central Bank’s loose monetary policy and the government’s plans to increase state spending will provide additional stimulus.

But the advisors also warned that the German economy was facing increased risks, including the Italian election result, uncertainty regarding the outcome of negotiations on Britain’s looming departure from the European Union and planned U.S. import tariffs.

“A spiral of protectionist measures would have a clear negative impact on the global economy and the German economy,” they said. (Reporting by Michael Nienaber Editing by Michelle Martin)

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