Bundesbank sharply slashed German growth forecasts to just 0.6% in 2019 and said the economy is “currently experiencing a marked cool down”. That is “mainly due to the downturn in industry, where lacklustre export growth is taking a toll. Nevertheless, “a more protracted, clear decline in economic output currently seems an unlikely prospect, though.” And, “once foreign demand picks up, German economic growth will be more broadly based again.”
Still, risks are tilted to the downside. And, it warned “additional negative external developments could intensify or prolong the downturn in Germany’s strongly export-driven economy.” In particular, the experts warn that an escalation of protectionist measures around the world could place considerable strain on German industry. In addition, they highlight the possibility of a disorderly Brexit as well as uncertainties surrounding the fiscal policy stance of the Italian government as risk factors for economic growth in Germany.
On GDP growth:
- 2019 at 0.6% (down from Dec projection of 1.6%);
- 2020 at 1.2% (down from 1.6%);
- 2021 at 1.3% (down from 1.5%).
On HICP:
- 2019 at 1.4% (unchanged);
- 2020 at 1.5% (down from 1.8%);
- 2021 at 1.7% (down from -0.1%;
Also released from Germany, industrial production dropped -1.9% mom in April, much worse than expectation of -0.5% mom. Trade surplus narrowed to EUR 17.0B in April. From Swiss, foreign currency reserves dropped CHF -16B to CHF 760B. Unemployment rate was unchanged at 2.4%.
