German government cuts growth forecasts for this year and next: document

By Gernot Heller and Rene Wagner

BERLIN (Reuters) - The German government has cut its forecast for growth in Europe's largest economy this year and next and sees an escalation in the global trade dispute as the main risk, a document seen by Reuters on Wednesday showed.

The government - due to present its updated forecasts on Thursday - slashed its 2018 and 2019 growth forecasts to 1.8 percent, compared with its previous predictions of 2.3 percent and 2.1 percent respectively, the document showed.

It blamed weak global trade, reduced state consumption due to provisional budgeting, revisions to previously reported data, and slower production in the auto sector due to difficulties adjusting to a new pollution standard - the Worldwide Harmonised Light Vehicle Test Procedure (WLTP).

Risks for the German economy include Britain's looming departure from the European Union and threat of economic crises in Turkey and Argentina spreading to other emerging economies, the document showed.

The German government expects the economy to expand by 1.8 percent in 2020, the document showed.

It said domestic demand remained strong but that the global economic environment was increasingly difficult.

Traditionally driven by exports, the German economy - now in its ninth year of expansion - relies heavily on household spending to grow as consumers enjoy record-high employment, rising real wages, strong job security and low borrowing costs.

(Writing by Michelle Martin; Editing by Maria Sheahan)