April 5 (Bloomberg) -- Bundesbank President Axel Weber and German Finance Minister Peer Steinbrueck said they are sticking to their growth forecasts for the German economy in 2008, even as the credit crisis curbs the global expansion.

``I think we can weather the financial turmoil to a wide extent,'' Steinbrueck said in an interview with Bloomberg Television. ``Germany is going to face a growth rate of about 1.7, 1.6 percent,'' he said, qualifying the government's official prediction of 1.7 percent.

Euro-region policy makers don't need to take fiscal or monetary-policy measures to boost growth, Weber, who's also a European Central Bank governing council member, said at a briefing with Steinbrueck in Ljubljana, Slovenia, today. ``Solid public finances'' in many member countries created scope ``to let automatic stabilizers work,'' he said.

The German economy is so far coping with the global slowdown caused by a U.S. housing recession, a stronger euro and record oil prices. Investor, business and consumer confidence all unexpectedly increased last month and unemployment fell to the lowest in more than 15 years.

Weber said he doesn't share the International Monetary Fund's ``pessimistic'' outlook for the German economy. The IMF cut its forecast for 2008 expansion there to 1.4 percent from 1.5 percent. He said he sees ``no reason'' to revise the Bundesbank's prediction for growth of 1.9 percent.

`Strong Growth'

``The labor market is very positive, capital expenditures are good, and everything that's export-related is going just as well as in recent years,'' Steinbrueck said. Economic figures for January and February point to ``strong growth'' in the first quarter, said Weber.

While ``we don't see an end to the U.S. housing crisis, the impact on German and European growth has been limited,'' Weber said. The IMF's forecasts ``would be very much at the lower end of our own projections.''

Still, while the German economy will grow at a pace this year that would have been welcomed three or four years ago, the ``recessive development'' in the U.S. will hit Germany in 2009, Steinbrueck said.

The minister defended a pay accord in the German public sector last month that handed workers an average increase of more than 8 percent over two years, saying the agreement followed job cuts and two years without net wage increases.

Low-Income Earners

Weber said the package, which gives low-income earners as much as 7 percent more pay this year, is ``clearly higher than we had expected'' and exceeds the assumptions made in the bank's economic forecasts.

``This agreement, like others, contributes to an increase in wages that's stronger than what's contained in our projections, and we see that with a certain concern,'' Weber said.

ECB President Jean-Claude Trichet said yesterday European labor unions ``would be doing things radically wrong'' if they take the German accord as a guideline.

Steinbrueck said it's ``a problem'' that accelerating inflation is eroding consumers' spending power. It's ``quite probable'' that the rate of consumer-price increases will come down to an average 2.2 percent to 2.3 percent this year from the 3.1 percent recorded in March, he said. The wage increases granted to German workers this year won't fuel inflation, he said.

To contact the reporters on this story: Rainer Buergin in Ljubljana at rbuergin1@bloomberg.net; Gabi Thesing in Ljubljana gthesing@bloomberg.net.

Last Updated: April 5, 2008 08:02 EDT