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Bundesbank: German Economy "Overcome the Phase of Weakness"

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Bundesbank: German Economy "Overcome the Phase of Weakness"

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The Bundesbank said today that the "German economy has outgrown its weakness," but that in the fourth quarter of this year and early 2020 growth will remain "very contained" as in previous quarters. the Bundesbank rules out "a recession" based on the current situation. Bundesbank economists thus see "the first signs" that the German economy may "be gradually overcoming the current phase of weakness".

The German central bank expects the economy to grow by 0.5% by the end of this year and 0.6% by 2020, which represents a strong downward revision compared to last June's forecast of 0.6% growth. % for this year and 1.2% the following year.

The Bundesbank currently forecasts that the economy is expected to grow by 1.4% in 2021 and the following year, respectively, against a forecast of 1.3% advanced in June for this two years).

Bundesbank President Jens Weidmann does not rule out, however, that "there are still external economic factors that may intensify and prolong the weakening of economic growth."

The Bundesbank also revised inflation forecasts to 1.4% in 2019 (identical to the June forecast) and 1.3% in 2020 (up from 1.5% advanced last June), justifying the fall in prices. of energy.

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By 2021, the German central bank expects inflation in Germany to grow by 1.6% (up from 1.7% in the previous forecast) and rise by 1.9% the following year.

The Bundesbank also hopes that the climate protection support measures that the government recently approved will contribute to a "sharp rise" in energy prices.

Hence, it emphasizes that prices in Germany may rise more than in other eurozone countries.

In June, the Bundesbank found that the German economy was cooling considerably after a period of great economic prosperity, but expected a stabilization in the following half.

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