Bundesbank slashes Germany's 2013 GDP growth forecast to 0.4%

07 December 2012 18:43  [Source: ICIS news]

LONDON (ICIS)--Germany’s central bank cut its projections for the country’s 2013 GDP growth to 0.4% on Friday from earlier forecasts of 1.6%, due to ongoing weakness in the eurozone and a slowing global economy.

“The cyclical outlook for the German economy has dimmed,” the Bundesbank said in an update.

“Enterprises are cutting back their investment and hiring fewer new staff,” it said.

German growth will be lower than previously assumed in light of market uncertainty caused by the current difficulties of some eurozone countries, the bank said, adding that the slowing of the global economy was also a factor.

Nevertheless, the Bundesbank does not foresee a protracted slowdown in Germany but instead anticipates a return to growth soon, “on the assumption that the global economy regains momentum and the euro-area reform process progresses further.”

“The sound underlying health of the German economy suggests that it will overcome the temporary lull without major damage to employment, in particular”, said Bundesbank president Jens Weidmann.

For 2012, the bank projects 0.7% GDP growth for Europe’s largest economy

In 2014, GDP could rise by 1.9%, provided that the eurozone banking and sovereign debt crises do not escalate further, and uncertainty among investors and consumers gradually subsides, the bank said.

In related news, Germany’s economics ministry said on Friday that it expects production trends in German industry and in building and construction to remain moderate in coming months.

The country’s productive output fell 2.6% in October from September. However, industrial orders rose 3.9% in October from September.

The chemicals and pharmaceuticals sector saw month-to-month increases in both production and orders in October from September, according to the Bundesbank's latest data releases.

Paul Hodges studies key influences shaping the chemical industry in his Chemicals and the Economy Blog

By: Stefan Baumgarten
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