Germany’s central bank has cuts its economic growth forecasts for this year and next owing to an expected lack of improvement in the eurozone.
The Bundesbank now expects the German economy to expand by 0.3 per cent in 2013, down from its previous forecast of 0.4 per cent, while the 2014 outlook has been moved from 1.9 per cent to 1.5 per cent.
“The world economy will gain momentum in the course of this year. In the euro area, too, the economy appears to be bottoming out,” a statement by the bank says.
“Nevertheless, the Bundesbank sees continuing structural problems as standing in the way of a rapid improvement. This is likely to place a major strain on the German economy.”
The German economy was able to grow throughout most of 2012 but witnessed a quarter of contraction in the final three months of the year.
Germany, which is the eurozone’s largest economy, narrowly avoided recession after private consumption helped it to grow in the first quarter of 2013.
The downgrade comes a day after the European Central Bank lowered its growth estimate, saying it expects the region’s economy to shrink by 0.6 per cent in 2013. This is down from its earlier estimate of a 0.5 per cent contraction.