Rising foreign demand has more than offset the negative impact of the strong euro on Germany's exporters and Europe's largest economy remains in a strong recovery, the Economy Ministry said on Tuesday. The global economy has begun 2007 in good form, the ministry added, though it said there was a risk Japan could slide back into deflation.
"Irrespective of the long-standing upward direction of the economic cycle, the Japanese economy again faces the threat of slipping back into deflation," the ministry said in a report. The Japanese government has set a goal of getting out of price-eroding deflation before the end of March. Germany remained on a growth path.
"The German economy remains in a strong upswing," the ministry added. "The continued strong growth of third party (non-EU) countries has apparently until now more than compensated for the dampening effect from the strong euro."
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