Bundesbank cuts German growth forecast

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The German Bundesbank has cut growth forecasts for the German economy from 1.9% to 1.4% in 2014 and from 2% to 1% in 2015, president Jens Weidmann announced during its semi-annual projection.

The news comes one day after ECB president Mario Draghi announced a reduction of the growth forecast for the eurozone from 1.6% to 1% for 2015.

“However, there is reason to hope that the current sluggish phase will prove to be short-lived”, commented Weidmann.He stressed that the German economy “is still in good shape” as the labour market is set to recover further.

The planned introduction of a minimum wage combined with a buoyant labour market could lead to in increase of the Harmonised Consumer Price Index from 0.9% this year to 1.1% in 2015, Weidman argued.

With regard to the current low level of oil prices, he remains optimistic: “If crude oil prices remain at this subdued level for an extended period of time, economic growth in 2015 and 2016 could turn out to be between 0.1 and 0.2 percentage point higher in each case”, he asserted.

Mona Dohle
Mona Dohle speaks German and Dutch, she is DACH & Benelux Correspondent for InvestmentEurope. Prior to that, she worked as a journalist in Egypt and Palestine. She started her career as a journalist working for a local German newspaper. Mona graduated with an MSc in Development Studies from SOAS and has completed the CISI Certificate in International Wealth and Investment Management.

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