LONDON (Reuters) - Deutsche Bank raised its forecast for German economic growth next year, saying a heavy influx of migrants would increase consumption as much as half a percentage point.
German gross domestic product is now forecast to come in at 1.9 percent in 2016 compared with 1.7 percent in previous forecasts, the bank said in a research note published on Friday.
“Although the external and the financial environment have deteriorated we have lifted our 2016 GDP call,” Deutsche Bank said.
“Drivers are stronger real consumption growth due to lower oil prices/stronger EUR and the surge in immigration,” analysts wrote, adding they expected the boost in consumption to be evenly split between private and public.
Around 800,000 refugees and migrants escaping war and poverty, many of them from Syria, are expected to arrive in Germany this year.
At the time of arrival, the average age of the immigrants is 23.3 years old - much younger than the domestic population, which averages 44.5 years, the bank said.
Germany has long struggled to deal with its aging population, with government and industry saying immigration was needed to counter the looming demographic squeeze.
Reporting by Karin Strohecker, editing by Larry King