Bundesbank: German economy to shrink slightly in Q2

Author: Justin Low | Category: Central Banks

Germany's central bank comments on the domestic economy

  • One-off factors that underpinned Q1 expansion are expiring or being reversed
  • Activity in the construction sector was cooling
  • Weakness in the manufacturing sector continues to be a drag on the economy
  • But buoyant forces underpinning strong domestic-oriented sectors of the economy remain fundamentally intact
That's not the kind of headline that'll encourage confidence in the euro area economy. They can argue all they want about robust domestic demand but if the backbone of the economy i.e. manufacturing is slumping, then that outweighs everything else.

With global trade tensions still ever present, it's hard to paint a bright outlook for German economic conditions even in the second half of the year.

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