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Bundesbank Gives Up on First-Quarter Economic Rebound in Germany

Bundesbank Gives Up on First-Quarter Economic Rebound in Germany

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The slowdown in Europe’s largest economy is unlikely to have enjoyed a long-awaited turnaround at the start of 2019 as German industry continued to stumble.

“The basic cyclical trend of the German economy remained subdued after the turn of the year. This was mainly due to the continuing slowdown in industrial momentum,” the Bundesbank said in its monthly report published Monday. Greater catch-up effects in the country’s auto industry “are no longer expected for the current quarter.”

Bundesbank Gives Up on First-Quarter Economic Rebound in Germany

The assessment comes after a series of temporary factors -- such as new emissions-testing procedures that stalled production at carmakers -- led to an unexpectedly pronounced weakening of key economic metrics. Policy makers are trying to assess how much of the slowdown in Germany and the euro area is related to one-offs, or whether it marks a more protracted shift in the economy.

In the three months through March, hopes for a rebound were challenged by new hurdles, such as a strike at a motor factory in Hungary, according to the Bundesbank. Still, it expects the effect on auto output to wear off, and sees construction and private consumption supporting growth amid a strong labor market, pay gains, and expansive fiscal measures.

To contact the reporter on this story: Carolynn Look in Frankfurt at clook4@bloomberg.net

To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Jana Randow, Kevin Costelloe

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