BERLIN, Sept. 17 (Xinhua) -- The German Central Bank (Bundesbank) expressed confidence on Monday that relatively weak gross domestic product (GDP) growth at the start of the third quarter (Q3) will prove to be no more than a "temporary phase of weaknesses" as the economy maintains its momentum in 2018.
In its monthly report, the Frankfurt-based institution noted that companies remained upbeat about their prospects according to recent surveys of business sentiment. "The ongoing expansion in Germany is fundamentally intact, not least due to the continued strong development of the domestic economy", a statement by the Bundesbank read.
The monetary institution partially attributed a slowing of output identified around July to the one-off effect experienced in the automotive sector from the introduction of the Worldwide harmonized Light vehicles Test Procedure (WLPT). The new regulatory regime for exhaust systems testing became legally-binding in the European Union (EU) as of September. Technological measures required to fulfil the stands were associated with delays in production at several German carmakers hereby led the Daimler and Volkswagen Groups to issue profit warnings to investors.
Nevertheless, the Bundesbank argued on Monday that industrial growth was likely to pick up again once the regulatory changes had been digested and compliance by the local automotive industry was ensured. "As soon as the problems associated with the transition are overcome in the automotive industry, the pace of wider economic growth is likely to accelerate again", the report stated.
The Bundesbank further drew attention to the lasting strength of the domestic construction sector which grew by a further 21 percent between July and June. On an annual and quarterly basis, construction output was up by 2 percent and 4 percent respectively.
Additionally, the report highlighted an increase in the number of employed Germans by 1.3 percent or 574,000 between July 2018 and July 2017. The Bundesbank predicts that domestic consumption will make a greater contribution to GDP growth in Germany during the coming years as unemployment falls and wages rise.
