Bundesbank slashes German growth forecasts

June 7, 2019

FRANKFURT (Reuters) – Germany’s central bank cut its growth and most of its inflation projections on Friday, reflecting weak external demand that will more than offset a relatively robust growth in domestic consumption and investment.

The Bundesbank now sees 2019 GDP growth in the euro zone’s biggest economy at 0.6%, well below the 1.6% it forecast in December, and it also lowered next year’s forecast to 1.2% from 1.6%.

“The weak underlying cyclical trend is likely to continue in the second and third quarters of 2019,” it said in a statement. “After a slight decrease in the second quarter, real GDP is likely to pick up again somewhat in the third quarter.”

Inflation this year is still expected at 1.4% but the bank lowered the 2020 projection to 1.5% from 1.8%, well below the European Central Bank’s target of close to but below 2%.

(Reporting by Balazs Koranyi; Editing by Andrew Heavens)

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