German Government To Cut Its Own Economic Growth Forecasts

(Reuters) - The German government will cut its economic growth forecasts for 2014 and 2015 next week, according to two sources in the ruling coalition, one of whom said the growth outlook for both years would be cut to about 1.25 percent.

"This is the approximate number," said one of the sources. The second source said there would be a "sharp cut" in the twice-yearly official projection, last made in April, of 1.8 percent growth for this year and 2.0 percent for next year.

Germany had a strong start to the year but a downward revision looked inevitable after a 0.2 percent contraction in the second quarter and a slew of weak data, including a slump in exports, pointing to third-quarter stagnation.

This week the International Monetary Fund slashed its German growth forecasts to 1.4 percent for 2014 and 1.5 percent for 2015 and leading research institutes lowered their forecasts to 1.3 percent and 1.2 percent respectively.

Senior government officials will meet on Monday to refine the forecasts to be announced by Economy Minister Sigmar Gabriel on Tuesday, which will serve as the basis for new tax estimates.