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FRANKFURT (Reuters) – The German economy will continue to struggle in the first half, but indicators still suggest the slowdown could be temporary with a possible rebound in the second half of the year, the Bundesbank said in a monthly economic report on Monday.
The German economy stagnated in the fourth quarter of last year, and policymakers are increasingly concerned that Europe's largest economy could be bigger and longer than previously thought. which represents a risk for the entire continent.
Weak orders in the manufacturing sector, increasingly gloomy confidence indicators and bleak investments suggest that it is unlikely that the economy will regain vigor during the winter months. said the Bundesbank.
"All of this suggests that the underlying pace of the economy is expected to remain moderate at least during the first half of the year," the central bank said. "But nothing indicates that the slowdown is turning into a real slowdown."
He added that auto exports, a major drag on growth at the end of 2018, are beginning to normalize, that the labor market remains healthy and that strong wage developments suggest that private consumption will resume.
Budget support should also intervene, supporting growth, he added.
(Report by Balazs Koranyi, edited by Ed Osmond)
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