German central bank confirms 2011 growth forecast

22nd August 2011, Comments 0 comments

The German central bank confirmed Monday its 2011 economic growth forecast of "around three percent" but noted several risks to the outlook.

"At present, the underlying German economic trend remains oriented upwards in the second half, though it should slow down a bit," the Bundesbank said in its monthly report for August.

As a result, the bank still expects the biggest European economy to grow by "around three percent" this year. In June the bank had been more specific, estimating the economy would expand 3.1 percent.

"Companies have substantially reviewed lower expectations that were extremely optimistic and orders -- aside from large orders -- have lost their vigour," the bank said.

Other factors seen as influencing the outlook included "uncertainties over the US economy and possible signs of cyclical fatigue in emerging countries," as well as "increasing financial markets tension and persistent sovereign debt problems."

Germany should benefit however from strong domestic demand driven by corporate investment, a solid construction sector and falling unemployment, the central bank added.

The German economy grew just 0.1 percent in the second quarter after a sharp gain of 1.3 percent in the first as the broader European economy slumped.

© 2011 AFP

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