Germany will likely see economic growth of between 1.5 and 1.7 per cent in 2004, but weak private consumption means Europe's largest economy remains dependent on exports, the BDI industry federation said today.
"The German economy is still fragile," the group said in its latest economic report. "The surprisingly strong growth at the start of the year has been solely attributable to powerful export growth."
Germany's economy wrong-footed analysts by growing 0.4 per cent in the first three months of 2004, and a number of economists have said it may even surpass this figure in the second quarter due to global demand for German goods.
The first five months of this year have seen German exports increase some 10 per cent from the same period a year ago.
Most of the country's leading economic research institutes are forecasting growth of around 1.8 per cent this year, which would be the strongest since 2000.
The BDI added that it had raised its forecast for export growth to around eight percent this year, but was not optimistic about the chances of a pick-up in consumer spending.
"The Achilles' heel of the German economy is, and will for the time being remain, private consumption, which has stagnated over the period covered by the report," the BDI said.
German retail sales shrank by more than five percent year-on-year in May, and the country's HDE retail association has said June sales would be little better.