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BERLIN, Nov 6 (Reuters) - Economic advisors to the German government have slashed their growth forecasts for this year and next, partly due to concerns about a trade war with the United States and the risk of a disorderly Brexit, a newspaper group reported on Tuesday.
The advisors forecast growth of 1.6 percent for this year, down from their previous prediction of 2.3 percent, and they cut their 2019 estimate to 1.5 percent from 1.8 percent, the NBR group of local newspapers reported.
The United States is Germany’s most important single export destination after the bloc of European Union countries while China is its biggest business partner in overall trade volumes, so the Sino-U.S. tariffs dispute is also hitting German firms.
The five advisors, often called the “wise men” despite including a female, also cited the weaker global economic environment as a reason for more pessimistic estimates regarding the German economy, which is now in its ninth year of expansion.
The advisors, who are due to present their report on Wednesday, also expect capacity bottlenecks like a shortage of skilled labour to hit growth, but they do not expect slower growth to have a negative impact on labour market, NBR said.
Strong demand for labour means workers in Germany can expect to see their wages continue to rise, the report said.
That bodes well for household spending, on which the German economy - traditionally propelled by exports - has become heavily reliant for growth. In addition to rising real wages, consumers here are benefiting from record-high employment, strong job security and low borrowing costs.
Reporting by Michelle Martin, editing by Riham Alkousaa