THE German Economy Ministry slashed its forecasts for economic growth Tuesday to 1.2 percent for this year and 1.3 percent for next year, blaming crises abroad and moderate global growth.

    That signals a strong downturn in expectations when compared with the ministry’s April forecasts for growth of 1.8 and 2 percent respectively in Europe’s largest economy.

    It estimated exports would increase by 3.4 percent this year and by 4.1 percent next year while imports would surge by 4 and 5.5 percent.

    That means foreign trade will subtract 0.1 percentage points from growth this year and detract an even-bigger 0.3 percentage points next year, the ministry said.

    “The German economy is steering through rough foreign waters. Geopolitical crises have also increased uncertainty in Germany and moderate growth is weighing on the German economy,” said Economy Minister Sigmar Gabriel, adding that domestic impetus nonetheless remained intact.

    Even forecasts for domestic demand were, however, downgraded to an increase of 1.4 percent this year and 1.7 percent next year compared with April’s forecasts for gains of 1.9 and 2.1 percent respectively.

    Gross capital investment will rise by 3.2 percent this year and by 3.3 percent next, the ministry said.

    Gabriel said that lower German growth forecasts were due to crises in Ukraine and the Middle East and a slowdown in export markets around the world, but there was no reason to think the country was in a recession.

    However, he rejected any departure from the goal of Chancellor Angela Merkel’s right-left “Grand Coalition” to balance the budget next year for the first time since 1969.

    “I can’t think of any argument to say Germany is in recession or that we need to abandon our debt plans,” Gabriel told reporters, referring to the government’s target of a balanced budget next year with no new debt.

    Even if Berlin were to borrow to modernize its roads and railways, broadband networks and energy grids, that would not create more growth in weak eurozone countries, he said.

    “More debts in Germany do not create growth in Italy, France, Spain or Greece,” said Gabriel.

    “So the German Government sticks to its goal that a federal budget without new debt — the famous ‘black zero’ — can be achieved with the growth rates of 1.2 percent in 2014 and 1.3 percent in 2015 that we now expect,” he told a news conference.

    Gloomy data on the eurozone’s biggest economy, Germany, spooked financial markets Tuesday and added weight to calls for faster efforts to revive public investment at a meeting of European Union finance ministers.(SD-Agencies)