Merkel NIGHTMARE: German central bank SLASHES growth as eurozone economic rise UNRAVELS

Friday, June 15, 2018
By Paul Martin

GERMANY’S central bank has slashed its forecast for how fast the eurozone’s largest economy would grow this year and warned of greater “uncertainties” as trade war gloom gathers over Europe.

By DAVID DAWKINS
Express.co.uk
Fri, Jun 15, 2018

As the German economy continues to falter as global trade war fears mount, the Bundesbank has announced that it expects German GDP growth of 2.0 percent this year, a significant climb-down from the 2.5 percent it forecast in December.

Bundesbank President Jens Weidmann has warned that the German Eurozone’s largest economy is back under pressure due to shift in globlal sentiment.

He said: “Uncertainties regarding the prospects for the German economy are considerably greater than they were.”

The central bank statement adds that “risks relating to the external environment outweigh the effects resulting from the probably more expansionary fiscal policy in Germany.”

The statement said: “According to the economists’ estimates, exports and commercial investment are likely to see weaker growth over the projection horizon than in the previous year. In addition, the growing lack of skilled workers is increasingly dampening employment growth. Despite significantly stronger wage growth, this tends to brake the rise in households’ disposable incomes.

“This lowers the underlying trend of private consumption.”

Yesterday the European Central Bank voted to halve the pace of its Quantitative Easing (QE) programme after September to just €15bn per month, from €30bn per month at present.

Alongside the headline QE revelation, President Mario Draghi also cut the Eurozone’s growth forecast, from 2.4 percent to 2.1 percent.

Alluding to a potential trade war, President Draghi said that global risks have increased alongside a rise in protectionist measures.

Danielle Haralambous, UK Analyst at the Economist Intelligence Unit, told Express.co.uk that the GDP reduction marked a, “a sizeable downward revision” in economic optimism.

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