FRANKFURT (MNI) – The German economy is set to run into difficult
cyclical headwinds in the coming months, although are were few signs to
suggest the economy is heading for a recession, the Bundesbank said
Monday in its Monthly Report.
The central bank forecast a slowdown in economic growth for the
coming year to 0.5% to 1.0%, which it said would result in a shift from
external to domestic growth forces.
Highlighting cooling overseas demand and the nervousness
dominating financial markets, the Bundesbank noted that domestic
industry had downgraded its export forecasts to a level slightly below
the long-term historical average.
On a positive note, it said German companies were correcting their
investment or hiring plans in anticipation of only a mild downturn.
The bank forecast little change in the labour market, although it
said risk factors were present and it could not rule out a pronounced
period of weakness if the debt crisis in Europe intensified
significantly.
The debt crisis in the euro area is jeopardizing the recovery in
Europe and threatening to transfer the negative impact to trading
partners outside the EU, the Bundesbank warned.
Against this background, it is important that states take all
necessary measures to restore confidence in their public finance and
regain lost competitiveness, it reiterated.
–Frankfurt bureau: +49-69-720 142; frankfurt@marketnews.com–
[TOPICS: MT$$$$,M$X$$$,M$G$$$,M$$EC$,MGX$$$,MFX$$$]
