The International Monetary Fund has revised downwards its forecast for German growth this year to somewhere between 1-1.5%, compared with a previous forecast of 1.5%, IMF managing director Rodrigo Rato said today.
'The German economy grew by 1.7% last year, primarily as a result of exports. Business sentiment appears to have improved a little and there are signs of a recovery in domestic demand,' he said.
'Nevertheless, we expect growth to slow to 1-1.5%,' Rato told the daily Frankfurter Allgemeine Zeitung in an interview.
That is slower than the government's official growth forecast of 1.6% this year.
Rato urged the euro zone's biggest economy to press ahead with reforms to help boost growth. 'The social security net has long become a trap. If this doesn't change and there are no further reforms, the growth potential of the German economy, which is currently no more than 1.5-1.9%, will sink further,' Rato said.
'In Germany, as in other European countries, more people will have to work and employees will have to work a little longer than they do at present,' he added.
