Central bank slashes German growth predictions

16:33 | 07/06/2019 Global Economy

Germany's Bundesbank has cut its projections for economic growth in 2019, citing "lackluster" exports. It said both growth and the inflation rate in the eurozone's biggest economy were currently facing risks.

Germany's Bundesbank on Friday gave a bleak assessment of the country's current economic prospects, cutting its forecast for 2019 GDP growth to just 0.6% from the 1.6% it predicted in December.

It also lowered its prediction of 1.2% growth in 2020 from a forecast of 1.6% six months ago.

"The German economy is currently experiencing a marked cooldown," the central bank said in a twice-yearly update of its predictions. "This is mainly due to the downturn in industry, where lackluster export growth is taking a toll."

The central bank also warned of further possible dangers to output, despite not expecting a more protracted decline.

"For economic growth and, to a lesser extent, for the rate of inflation, it is the downside risks that predominate as things stand today," it said.

Exports expected to rise again

The bank said it still expected 1.4% inflation this year, but predicted that because of weak growth, prices would rise much slower than thought earlier.

On a more positive note, the bank said it reckoned on exports rising in the second half of the year, leading to an increase in production by industry.

"As soon as the demand from abroad gains momentum, the growth of the German economy will again stand on a broader footing," Bundesbank President Jens Weidmann said.

The German government also recently reduced its projections for economic growth in 2019 to 0.5% from an original 1.0%.

Theo Dw