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Germany lowers 2020 GDP forecast, but rules out crisis fears

The German federal government lowered its GDP growth forecast for 2020 to 1.0% from a previous estimate of a 1.5% expansion, amid a continuing decline in industrial activity and weak global trade.

The official GDP growth forecast for 2019 remained at 0.5%, reflecting the consensus of Germany's leading economic institutes.

Export-oriented German producers were negatively impacted by a worldwide slowdown in industrial and investment activity, compounded by uncertainty from Brexit and international trade disputes. The German economy ministry indicated, however, that it sees the global trade tensions bottoming out soon, leading to a recovery in foreign demand for Germany's exports.

"Even if the outlook is currently subdued, there is no threat of an economic crisis," German Economy Minister Peter Altmaier said. He added that the country's consumer demand remains robust amid rising employment and wage numbers, as well as increased investment in the construction sector due to low interest rates.

Germany's government plans to cut taxes and reduce red tape, while encouraging market-based solutions for the country's energy transition, technological innovation and digitalization efforts.

"Our companies are strong, but they need more tailwind from the federal government," Altmaier said.