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German growth 'sluggish' until year-end: Bundesbank

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The German economy, Europe's biggest, will continue to show little sparkle at least until the end of the year, the German central bank or Bundesbank predicted on Monday.

[FRANKFURT] The German economy, Europe's biggest, will continue to show little sparkle at least until the end of the year, the German central bank or Bundesbank predicted on Monday.

"The further deterioration in economic expectations and the stagnation of new orders point to a rather sluggish course of economic development in Germany until at least the end of 2014," the Bundesbank wrote in its latest monthly report.

German gross domestic product (GDP) grew by a meagre 0.1 per cent in the third quarter, after contracting by 0.1 per cent in the preceding three months. And there is little sign that Europe's economic engine will gain traction in the coming months.

"No marked recovery in important euro-area partner countries has yet materialised," the report stated.

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"In the light of increased global risks together with uncertainty about the implications of some economic policy measures, there may be a delay before the recovery in corporate investment resumes," it said.

On the positive side, the German economy would benefit from the euro's decline against the dollar, falling oil prices and robust consumer spending thanks to a strong labour market, the Bundesbank said.

The government and leading economic think-tanks have recently downgraded their growth forecasts for Germany recently.

Berlin is currently pencilling in growth of 1.2 per cent for 2014 and both the top German institutes and the International Monetary Fund are forecasting 1.3 per cent growth.

AFP

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