BUBA out with its semi-annual review 9 Dec
- both raised to +1.8%
- cuts inflation f/cast to 1.4% from 1.5%, 2018 1.7%, 2019 1.9%
- German budget to generate surpluses for years without new measures
- govt debt ration could fall to 60% of GDP
- sees increasing labour market bottlenecks, limiting jobs growth
Cautionary tones amongst the more bullish headline.
"Germany's economy is continuing to move on a sound upward path. "Its main driver is buoyant domestic demand, which is being bolstered by the favourable situation in the labour market and by rising household income," said the Bundesbank's President Jens Weidmann in reference to the Bank's latest semi-annual economic projection.
However, the highly favourable setting for household consumption at present looks set to see a slightly less favourable development in the years ahead. In this regard, Mr Weidmann pointed out that employment would grow less dynamically as a result of demographic change, whereby the pool of people available to work would shrink. This, he said, would have a dampening effect on consumption growth.
"Moreover, rising energy prices reduce consumers' purchasing power," he pointed out. Mr Weidmann explained that foreign business, which will continue to be held back by muted growth in global trade next year, should slowly gather steam as the markets for German exports improve, "but this is unlikely to fully offset the slight downturn in domestic activity""
Full report here
