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Germany's Ifo Raises Growth Outlook

Germany's Ifo Institute upwardly revised its economic forecast for 2017 and 2018. Nonetheless, growth is expected to be weaker than in 2016 due to a lower number of working days.

The largest euro area economy is expected to grow 1.5 percent next year, after jointly forecasting just 1.4 percent growth with other institutes in autumn. The real growth is projected to improve to 1.7 percent in 2018 instead of 1.6 percent.

"All of the signs indicate that the fourth quarter of 2016 will be stronger than previously anticipated, and that this dynamic will continue into the New Year," Ifo President Clemens Fuest said in Berlin.

The Ifo confirmed the Joint Economic Forecast of 1.9 percent growth for 2016.

The number of unemployed will remain stable in all three years at 2.7 million, despite the influx of refugees into the labor market, the institute said. The unemployment rate is estimated to remain constant at 6.1 percent.

The Institute expects inflation rate to rise to 1.5 percent in 2017 and 1.7 percent in 2018, as the effects of oil price cuts start to fade.

"Germany's inflation rate is approaching the European Central Bank's target; and since a similar development is forecast for the euro area as a whole, the ECB should accelerate its phase-out of bond purchases," added Fuest.

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