The German economy faces another sluggish year despite a likely rebound in exports as households see their spending power shrink, the country's central bank said today as it halved its growth forecast for 2020.
"Growth in domestic demand will probably not be as dynamic as it was during the boom period of previous years," the Bundesbank said in its biannual report on the economy.
"This is due mainly to households' real disposable income, which fell primarily on the back of a significant slowdown in employment growth," the bank said.
The Bundesbank halved its real GDP growth prediction for next year to 0.6%, bringing it in line with the consensus of private sector economists.
It also trimmed its forecast for this year by 10 basis points to 0.5% while raising its 2021 estimate by the same amount to 1.4%.
"For economic growth and, to a lesser extent, for the rate of inflation, the risks are tilted to the downside as things stand today," the Bundesbank said.