Bloomberg News

Bundesbank Says German Growth May Have Come to ‘Standstill’

January 24, 2012

(For more on Europe’s debt crisis, see EXT4.)

Jan. 23 (Bloomberg) -- The Bundesbank said economic growth in Germany, Europe’s largest economy, may have come to a “standstill” in the fourth quarter of 2011.

“After the strong rise in economic performance during the summer, even slightly negative growth can’t be ruled out,” the Frankfurt-based central bank said in its monthly report today. “Growth may have come to a standstill in the last quarter of 2011.” Manufacturing “in particular has suffered from the slowing global economic dynamic and the disruption from the debt crisis in the euro area.”

European finance ministers meet in Brussels today to try and forge a long-term solution to the region’s sovereign-debt crisis, now in its third year. While Germany’s economic expansion has powered the euro-region economy, it is edging toward a recession as budget cuts across the 17-member currency area curb demand for its export goods.

While the Bundesbank forecast a recovery in 2013, with gross domestic product projected to rise 1.8 percent, the economy may expand 0.6 percent this year, it said. “For the beginning of 2012, the indications are that the economy will move sideways,” according to the report.

Germany’s statistics office said on Jan. 11 the economy probably shrank “roughly” 0.25 percent in the final three months of last year. Growth slowed to 3 percent in 2011 from 3.7 percent in 2010, which was the most since German reunification two decades ago.

--Editors: Simone Meier, Jennifer M. Freedman

To contact the reporter on this story: Jeff Black in Frankfurt at jblack25@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net


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