HomeLive CommentsBundesbank: Economic activity could decline slightly in the current quarter

Bundesbank: Economic activity could decline slightly in the current quarter

Germany’s Bundesbank noted in its monthly report that “economic output fell slightly” in Q2, referring to the -0.1% qoq GDP contraction. And, “economic activity could also decline slightly in the current quarter”. The downturn in industry “is not yet apparent” and this may also “gradually affect some service sectors.”

But President Jens Weidmann still noted that “domestic economy is still doing well”. And, “the weakness has so far been concentrated on industry and exports”. He added that important reasons for the slowdown are the “international trade conflicts and the Brexit ”

The reported also noted that falling demand abroad has increased the downturn. In particular, exports to the UK were weak in spring, due to original Brexit date of March. The large purchases from UK in winter months resulted in counter-movement in spring. Additionally, with exports “slumping sharply”, and “given the declining capacity utilization and subdued manufacturing outlook, companies are likely to hold back on investment in new equipment and facilities.”

Further, construction investment had also declined. Private consumption should have been only slightly above the level of the strong previous quarter. Only public consumption could have supported the economy significantly.

Featured Analysis

Learn Forex Trading