FRANKFURT (AFP) -
The
German economy, Europe's biggest, will likely slow down in the second
quarter after showing steady growth in the year's first three months,
the Bundesbank central bank said Monday.
"The German economy
started 2016 with a lot of momentum," it said in its latest monthly
report. However "a decline in the pace of economic growth looks to be on
the horizon for the second quarter."
The Bundesbank recalled that
the German economy had seen "a solid rate of expansion" in the second
half of 2015 with growth in the third and fourth quarters of about 0.3
percent, which it said "largely matched its potential".
The bank forecast first-quarter growth would match or slightly surpass that rate.
However
it said stagnating industrial orders and a further worsening of the
closely watched Ifo business climate index, including a sharp decline in
its previously stable production and export expectations indices, did
not bode well for the second quarter.
International demand for
German goods had long kept the country largely insulated from external
shocks including the slowdown in Chinese growth and other emerging
markets as well as geopolitical tensions.
But the combined effect of negative factors is starting to be seen in certain indicators.
For
the moment "the mood of consumers remains very optimistic", the
Bundesbank said, after domestic consumption replaced exports last year
as the primary engine of economic growth.
Speaking at the
Bundesbank's annual news conference, president Jens Weidmann said the
German economy was "in good shape overall" and hailed a "distinct rise"
in real disposable income, due in part to low inflation.
For 2016
as a whole, the Bundesbank is pencilling in growth of 1.8 percent,
slightly more than the government's forecast of 1.7 percent.
© 2016 AFP
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