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Bundesbank sees signs of German economic slowdown
Europe's powerhouse Germany is losing momentum as its economy is feeling the pain from a slowdown in the rest of the euro zone, the Bundesbank said on Monday.
The Bundesbank said in its monthly report for September that it expects the German economy to continue on its upward trend after a solid start to the third quarter, but it added that signs of a slowdown were emerging.
"Perspectives for the further economic development are still formed by great uncertainty," the Bundesbank said. "The domestic economic situation is so far robust, but signs of a weaker dynamics are noticeable."
The Bundesbank pointed to Germany's labour market, where the rise in employment was slowing down, also as companies were less willing to hire.
Germany's foreign trade especially could be hit stronger than before by developments in the euro area, the Bundesbank added.
The Munich-based Ifo think tank showed on Monday that German business sentiment dropped for the fifth successive month in September after economic momentum eased in the third quarter as weaker foreign demand weighed on exports.
While the German economy steamed ahead in the first three months of the year, saving the euro zone from recession by growing 0.5 percent, it lost momentum in the second quarter, with growth slowing to 0.3 percent.
The Finance Ministry warned in its monthly report last Friday that data pointed to economic growth weakening in the remainder of the year. Many economists are now predicting a contraction for the third and possibly the fourth quarters.
[Source: Reuters, Frankfurt, 25Sep12]
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