BERLIN (Reuters) - The growth outlook for the German economy remains positive, the ZEW institute said on Tuesday despite a fall in investor morale for the second consecutive month in July which economists attributed to a stronger euro.
Europe's biggest economy is set for solid expansion in 2017 after growing by 0.6 percent in the first three months, driven by strong private investments, solid household spending and rebounding exports.
"Our overall assessment of the economic development in Germany remains unchanged compared to the previous month," ZEW President Achim Wambach said.
"The outlook for the German economic growth in the coming six months continues to be positive," he added.
The Mannheim-based research institute said its monthly survey among German investors showed that economic sentiment deteriorated to 17.5 from 18.6 in June. This undershot a Reuters consensus forecast for a fall to 18.0.
A separate gauge measuring investors' assessment of the economy's current conditions dropped to 86.4 from 88.0 last month. This compared with the Reuters consensus forecast predicting a stable reading.
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VB Bank analyst Thomas Gitzel attributed the drop to possible currency effects.
"German exporters don't like the prospect of a stronger euro. If the euro is rising, export goods become more expensive on world markets," Gitzel said.
The euro has risen above 1.1530 dollar <EUR=>, a fresh 14-month high, ahead of the next European Central Bank policy meeting on Thursday.
The Economy Ministry said last week that the economy will continue to enjoy solid growth in the second quarter, driven by soaring private consumption and higher construction activity while net foreign trade is unlikely to add to the expansion.
Analysts expect Germany's gross domestic product to grow by at least 0.6 in the April-June period. The Federal Statistics Office will publish preliminary second quarter GDP growth figures in mid-August.
The International Monetary Fund expects the German economy to grow by 1.8 percent in 2017 in real terms and by 1.6 percent in 2018.
(Reporting by Michael Nienaber; Editing by Madeline Chambers/Jeremy Gaunt)