July 27, 2017 / 10:46 AM / 22 days ago

Economic euphoria propels Merkel towards fourth term

FILE PHOTO: German Chancellor Angela Merkel arrives for a TV interview by ARD public broadcaster in Berlin, Germany July 16, 2017.Hannibal Hanschke/File Photo

BERLIN (Reuters) - German consumer morale hit a 16-year high, data showed on Thursday, the latest piece of positive economic news to boost prospects for Chancellor Angela Merkel as she prepares to seek re-election in September elections.

Market research group GfK's consumer sentiment indicator rose 0.2 percentage points to 10.8, its highest level since October 2001.

It echoed similarly positive business morale trends. The Munich-based Ifo economic institute said on Tuesday its business climate index hit a record high in July.

With Germany going to the polls on Sept. 24, the economic picture augurs well for Merkel, who is seeking a fourth term in office, burnishing the conservative's 13-point poll lead over her Social Democrat rivals.

"The German economy is now firing on all cylinders," Rolf Buerkl, a researcher for Nuremberg-based GfK, said in a statement, with consumers expecting further improvements over the remainder of the year.

Germany's manufacturing economy is also in rude health, anticipating a surge in already robust exports.

With unemployment hitting new lows each month, Merkel's Social Democrat challenger Martin Schulz has struggled to gain traction with a message focusing on the ills of inequality. He is refocusing his campaign on the risk of a rekindled refugee crisis.

Schulz, who heads to Italy for a meeting with Prime Minister Paolo Gentiloni and to visot a Sicilian refugee camp visit on Thursday, has warned that Germany is heading for a repeat of the 2015 flood of almost a million Syrian war refugees arriving in Germany, the toughest moment in Merkel's 12-year premiership.

Reporting By Thomas Escritt Editing by Jeremy Gaunt

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