Merkel’s Government Sees Germany Resuming Moderate Growth

German growth showed signs of revival in the second quarter, suggesting Europe’s biggest economy is resuming expansion at a “moderate pace,” the Economy Ministry said.

A rise in July industrial production in Germany was a “clear signal” of a return to economic growth at the start of the third quarter, the Berlin-based ministry said today in its monthly report. Crimped export growth to the euro area and the Ukraine crisis helped send the economy into reverse in the second quarter, it said.

Germany’s economy “is in good shape,” according to the report.

Chancellor Angela Merkel’s government is counting on the economy to grow by 0.4 percent in each of the year’s remaining quarters as it focuses on forgoing net new borrowing starting in 2015. The goal is partly based on the government’s target of 1.8 percent growth this year.

The growth target may be in jeopardy as geopolitical risks weigh on the economy, Finance Minister Wolfgang Schaeuble told lawmakers on Sept. 4, while emphasizing that the goal of balancing the budget remains achievable.

The government’s optimism that the economy will continue to expand in the second half is also based on a robust labor market that is supporting private consumption, the Economy Ministry said in the report.

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