Buba slashes growth forecasts for Germany

FXstreet.com (Barcelona) - Deutsche Bundesbank cut its growth forecasts for Germany for 2012 and 2013 on Friday. Nevertheless, the central bank stressed in its monthly report that due to its underlying health the German economy should soon return to growth.

According to the new estimates, German economy will expand by 0.7% in 2012 (vs the previous forecast of 1%) and by 0.4% in 2013 (sharply down from 1.6%). The Buba points to the impact which the continuing debt crisis in the peripheral Eurozone countries has on the core ones as the reason for a gloomier outlook.

However, the central bank implies that German growth should pick up again in 2014 and grow by 1.9%. The reports states that: “The sound underlying health of the German economy suggests that it will overcome the temporary lull without major damage to the labour market, in particular."