FRANKFURT (MNI) – The risks to Germany’s economic outlook have
“increased notably” for the second half of 2012 amid an escalation of
the Eurozone sovereign debt crisis, the Bundesbank said in its monthly
report released Monday.
But the German central bank said it expects no major cyclical shift
in the outlook for Germany as long as exports to emerging markets
continue to hold up reasonably well despite the downturn.
“Germany’s economic activity in the second half could be more
strongly influenced by the continuing escalation of the sovereign debt
crisis in the Eurozone,” the Bundesbank warned.
However, “as long as demand for German products can be reasonably
maintained in emerging countries despite the darkening outlook, a
turnaround in the overall cyclical direction should not be feared.”
The Bundesbank also noted that domestic demand continues to hold up
well in the crisis.
“Continued high consumption in private households is to be expected
despite increasing concerns about economic activity,” the report said.
Strong domestic demand is also having a positive impact on the
German government deficit. Economic activity will therefore likely have
a “neutral” effect on the deficit in the coming year, with revenue
expected to increase as wages and private consumption outpace GDP
growth.
— Frankfurt bureau: +49 69 720 142; email: ccermak@mni-news.com —
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