German economy to "shrink slightly" in Q2 2019: Bundesbank

Source: Xinhua| 2019-06-17 23:46:01|Editor: Li Xia
Video PlayerClose

BERLIN, June 17 (Xinhua) -- Germany's economy "should shrink slightly" in the second quarter of 2019, the country's central bank Bundesbank said in its monthly report published here on Monday.

"Special effects that contributed to a noticeable rise in gross domestic product (GDP) in the first quarter (of the current year) are either expiring or being reversed," the report said.

According to the Bundesbank, "rebound effects" would be expected in the German construction industry, which saw particularly high activity this past winter due to favorable weather conditions.

Furthermore, customers of the German car companies are now expected to make their car purchases, which they postponed last autumn after the introduction of the new Worldwide Harmonized Light Vehicle Test Procedure (WLTP) caused serious delivery issues, the Bundesbank stated.

Many German car manufacturers had struggled with delivery of their models at the end of last year. In September, when the WLTP was introduced, several German models did not comply with the testing standards and were not approved for sale.

In a year-on-year comparison, the number of newly registered cars in Germany fell by more than 30 percent in September 2018, according to the German Federal Motor Transport Authority (KBA).

"Advance purchases," which were made in the runup to the United Kingdom's initial end-of-March date for withdrawing from the European Union, would also be likely to have a negative effect on exports from Germany, the Bundesbank said. The Brexit deadline has now been extended until the end of October.

According to the Bundesbank, the "underlying economic trend" would be weak due to the "sustained downturn" in the German manufacturing sector.

"The weakness of world trade is weighing particularly heavily on Germany's internationally oriented manufacturing sector," commented Oliver Holtemoeller, vice president of the Halle Institute for Economic Research (IWH) last week.

Most economic research institutes as well as Germany's government have lowered their economic forecast for 2019. Last Thursday, the IWH announced that Germany's GDP would grow by only 0.5 percent in the current year, lower than the 1.5 percent of last year.

According to the Bundesbank, the German economy is currently backed up by "domestic oriented economic sectors." As a result, the "two-pronged economic picture" of weak demand from abroad and strong domestic economy would continue, the Bundesbank said.