Germany revises 2014 growth forecast

Germany has cut its growth forecast from 1.8 per cent to 1.2 per cent.

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By :  ,  Financial Analyst

Germany has announced a revision in its economic growth forecast for 2014 from 1.8 per cent to 1.2 per cent.

The country's government announced that the change will be in effect throughout the rest of the year and into 2015. It stated that "external" factors had been behind the revision and it expects its economy next year to grow by 1.3 per cent, a significant drop from the two per cent previously expected.

Germany has experienced some tough economic challenges in recent months thanks to a slowdown across the eurozone. The country's exports have been hit with figures from the Federal Statistical Office showing a 5.8 per cent drop during August compared to July. Imports were also down by 1.3 per cent leaving the nation's trade surplus to shrink to €17.5 billion (£13.8 billion).

The drop in exports prompted fears of Germany slipping into recession, with ING economist Carsten Brzeski stating that the country needed a "small miracle" to avoid this eventuality. The German economy contracted by 0.2 per cent between April and June and another month of this ilk would see the nation hit more financial trouble.

While Germany revises it growth forecast, economy minister Sigmar Gabriel believes there is no need for the government to change its economic policies.

Mr Gabriel said: "Domestic economic forces remain intact, with the robust labour market forming the foundation.

"As soon as the international environment improves, the competitiveness of German companies will bear fruit and the German economy will return to a path of solid growth."

Germany is not the only country in the eurozone with economic concerns, as the International Monetary Fund warned that recovery across the continent was "weak and uneven". The organisation also cut its forecast for economic growth across the eurozone.

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