Bundesbank: German economy recovering momentum

23 Jul 2018

German flagsThe German economy probably recovered some of its lost momentum in quarter two of this year, bolstered by private consumption, manufacturing and recovering exports, according to a monthly economic report by Bundesbank unveiled on Monday.

Economic growth in Europe’s largest economy was surprisingly halved to a quarterly rate of 0.3 per cent in the first quarter of the year, and many economists are still questioning whether the slowdown was just a blip or indicated the end of a boom for Germany’s economy.

A Reuters report stated apprehensions that mounting trade tensions could also weigh heavy on growth has been affecting investor sentiment. In addition, the International Monetary Fund has cautioned recently that the eurozone was facing ‘particularly serious’ risks that may result in a hard landing for the economy after a five year-long boom.

According to the Bundesbank: “The economy has likely showed better momentum in the spring than at the start of the year. Although it is unlikely that the high growth rates of the past year will be repeated, manufacturing was once again the key economic driving force.”

The bank continued that pharmaceutical output was especially robust, however car production also rose sharply, even though the output of intermediate goods stayed relatively weak.

Some of the improvement seen in the growth momentum was down to the expiration of one-off factors that impeded growth, such as a particularly disorderly flu season, the Bundesbank went on to say.

Household consumption was still a key foundation of growth, whilst government consumption also rallied, despite a dip in the early part of 2018.

The Bundesbank concluded: “Last but not least, activity in the booming construction sector likely increased significantly, despite capacity constraints.”