In its annual economic report, the government said it expected gross domestic product (GDP) to expand by 1.7 percent in 2016, fractionally below an earlier forecast of 1.8 percent.
“The German economy is fundamentally in good shape,” the report said.
“In the economy as a whole, production capacity utilization is at normal levels. The situation on the labor market remains positive.”
The main economic impulses “are currently coming from private household and state spending, as well as housing construction,” the government said.
“The large influx of refugees is contributing to this,” it added. Nearly 1.1 million asylum seekers arrived in Germany in 2015.
Experts say German growth is currently driven by low oil prices, the weak euro and interest rates that are close to zero.
Nevertheless, the German economy is also beginning to feel the pinch from the slowdown in developing economies such as China.
“The upward trend tailed off in the second half of 2015,” the report said.
“Slowing growth in developing economies dampened exports and corporate investment. However, at the end of the year, industrial demand gathered momentum once more. Corporate sentiment improved and the favorable trend on the labor market continued.”
According to a preliminary estimate by federal statistics office Destatis earlier this month, GDP expanded by 1.7 percent in 2015, fractionally above the 1.6 percent recorded in 2014.
At the same time, Germany clocked up a public budget surplus of 16.4 billion euros ($17.8 billion), equivalent to 0.5 percent of GDP and the second year in a row that Germany's state finances have been firmly in the black, Destatis said.
The government said it hoped for another budget surplus this year, AFP reported.
S/SH