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June 29, 2017

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Germany Q2 growth to slow, uptrend intact: ministry

FRANKFURT, Germany--The German economy, Europe's biggest, will book slower growth in the second quarter, after a robust start to the year, but the recovery remains intact, data showed on Friday.

Industrial output expanded only slightly in April, weighed down by a drop in construction activity, data compiled the economy ministry showed.

Nevertheless, exports rose strongly, causing the country's trade surplus to expand.

And the German central bank or Bundesbank upgraded its forecast for the whole year, saying the economy was on a "robust growth path."

"The German economy made a very buoyant start to 2014," the Bundesbank said.

"Even if it does not maintain the high rate of growth seen in the first quarter, the Bundesbank's economists are still confident about Germany's growth prospects," it said, pointing to strong domestic demand and an ongoing improvement in the economic situation of the industrial countries.

"The gradual recovery of the euro area suggests that Germany will follow a robust growth path," said Bundesbank chief Jens Weidmann.

The figures were published the day after the European Central Bank made major announcements of measures to boost the amount of cash in the eurozone economy.

The main decision was to charge banks for parking cash with the ECB, essentially to ward off deflation but with the parallel objective of stimulating activity, since the recovery in most eurozone countries is trailing behind Germany.

According to the Bundesbank's latest forecasts, German gross domestic product (GDP) was projected to grow by 1.9 percent in 2014 and then by 2.0 percent in 2015, followed by growth of 1.8 percent in 2016.

The latest trade data were also positive.

Germany's trade surplus — the balance between exports and imports — widened in April, driven by booming exports.

Strength of German Economy

Industrial output, on the other hand, showed very muted growth of just 0.2 percent, according to economy ministry data.

By sector, manufacturing output edged up by 0.1 percent and energy output increased by 2.7 percent, while construction output contracted by 1.2 percent.

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