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UPDATE 1-Germany sees higher 2019 tax revenue despite downturn, Spiegel says

(Adds government comment, Ifo)

BERLIN, Oct 25 (Reuters) - Germany's finance ministry expects 2019 tax revenue to come in four billion euros higher than previously projected, indicating that an economic downturn is not yet hurting state finances, the news magazine Der Spiegel reported on Friday.

A government spokeswoman declined to comment on the report and reiterated it would stick to its balanced budget policy.

Finance Minister Olaf Scholz earlier this month said Germany intended to stick to its balanced budget rules and increase spending without incurring new debt. He also said the government would use all fiscal options in case of an economic crisis.

The German economy, Europe's largest, contracted in the second quarter and many economists expect it shrank in the third quarter as well, which would put it in recession.

German business morale held steady in October and should grow slightly in the fourth quarter, the Ifo economic institute said on Friday.

(Reporting by Thomas Seythal; additional reporting by Michelle Martin; editing by Paul Carrel, Larry King)