Germany to keep warning of fiscal stimulus risks at G20: Weidmann

WASHINGTON (Reuters) - Germany will keep warning about the dangers of short-term fiscal stimulus at talks on the global economy in Washington although risks to growth are on the downside, Bundesbank President Jens Weidmann said on Thursday. Weidmann said he expected growth in Germany, Europe's biggest economy, to come in below levels expected earlier this year, but maintained its fundamentals were sound. Pressure is mounting for Germany to use its healthy budget to boost public spending and spur growth in Europe and Weidmann said he expected discussion of stimulus on Friday, when Group of 20 officials meet on the sidelines of World Bank and International Monetary Fund meetings. "(The) position is clear, in order to create sustainable growth there's little use in setting off an economic flash fire, particularly against a backdrop of historically high debt," he told reporters. Sound budget policy was an important condition for creating an environment favorable to investment and jobs, he said. Calls for Germany to ratchet up public investment in infrastructure instead of prioritizing deficit reduction have been fanned by a run of weak economic data and downward revisions to growth forecasts. The IMF this week cut its outlook for German growth in 2014 to 1.4 percent and to 1.5 percent in 2015 and leading German economic institutes see even weaker growth of 1.3 percent this year and 1.2 percent next. Weidmann said the situation had changed since June, when the Bundesbank hiked its 2014 growth forecast to 1.9 percent. "We see a more moderate rate of growth than we did in June, but nonetheless the German economy is basically in good shape," he said, noting that growth was close to "normal" levels. Weidmann, who also sits on the European Central Bank's policy-making Governing Council, repeated concerns about the central bank's plans to buy private sector assets. Growth in the euro area as a whole would be restrained going forward and downside risks prevailed at a global level, especially from geopolitical factors, he said. (Reporting by Krista Hughes; Editing by Kim Coghill)

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