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German economy doing better than expected

The German economy is in better shape than previously thought, according to a new report released on Wednesday. The news has fueled calls for the government to loosen its purse strings - particularly for pensions.

The German government expected growth of 1.5 percent and a new low in unemployment for 2015, Economy Minister and Vice Chancellor Sigmar Gabriel declared as he presented his yearly government report.

The report was significantly more optimistic than previous predictions - thanks, it said, to

consumer spending

, a low oil price, and a weakening euro, which is driving up Germany's exports.

"The German economy is in good shape," Gabriel said, before adding cautiously, "I would advise you not to take these economic figures as set in stone." There were, he said, still threats to the economy, particularly in the form of international conflicts.

According to the report, the number of those in work would rise by 170,000 to 42.8 million this year, while the unemployment rate would sink to 6.6 percent. At the same time, pre-tax salaries would rise by 3.2 percent and the average spendable income would rise by 2.7 percent.

'Investment is the key'

"The government will continue to increase the share of investments in the total expenditure, though without leaving the path of a balanced budget in the financial plan," Gabriel added, before repeating an old pledge to contribute an extra 8 billion euros ($9 billion) to the European Union's investment drive, via Germany's government-owned development bank, the KfW.

"Investments are a key to higher competitiveness, sustainable prosperity, and better quality of life for people in Germany and Europe," the report said. Nine billion euros are to be invested in research and development, while 5 billion euros will be invested in transport infrastructure by 2017.

More pensions

The news triggered a call from the pensioners' rights association VdK, calling for more money to be made available to the 20 million pensioners in Germany. "The government must now clear the path for a stronger pension increase," VdK President Ulrike Mascher told news agency DPA. "The expected wage increase would leave enough room."

bk/hg (dpa, AFP)

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