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German economy benefiting from weaker euro, IMF says

[BERLIN] The weaker euro and lower energy prices are supporting the German economy, giving Berlin room to bolster medium-term growth and reduce external imbalances, the International Monetary Fund (IMF) said on Wednesday.

"The ongoing upturn is benefiting from the euro depreciation and lower energy prices, and is underpinned by a healthy fiscal position and sound corporate and household balance sheets," the IMF said in a report on Germany.

Berlin should therefore aim at bolstering medium-term growth and reducing external imbalances, the IMF added.

German exports rose at their fastest pace this year in May and the trade surplus hit a record high at 22.8 billion euros.

The IMF also said there was a need to closely monitor the German housing market and life insurance sector "where persistently low interest rates may give rise to financial vulnerabilities".

The IMF confirmed its growth forecast for Europe's largest economy of 1.6 per cent this year and 1.7 per cent next year. This is slightly less than the government's growth forecast of 1.8 per cent this year.