Bundesbank Says German Growth Likely Stalled in Third Quarter

(Bloomberg) -- Growth in Europe’s largest economy may have stalled in the third quarter, when carmakers struggled with a switch to new emissions testing.

The Bundesbank said Monday in its monthly report that growth “may have come to a temporary halt,” which would be the first quarter without expansion in more than three years. It added that the “upswing in Germany is still fundamentally intact” and the “growth break shouldn’t be long-lasting.”

Germany has seen momentum weaken since the start of the year as global trade protectionism has weighed on the export-driven economy. The Bundesbank said the third-quarter slowdown was largely due to difficulties in adapting to new emission-test procedures in the auto industry, noting that temporary production losses left “deep marks” on industrial production.

The Economy Ministry made similar comments last week, when it predicted output will accelerate again this quarter after stagnating briefly. The ministry lowered its growth projections for 2018 and 2019 earlier in October, citing weaker external demand.

In the third quarter, construction slowed after seeing strong growth in the spring, the Bundesbank said, adding that retail sales were “modest.”

“The difficulties in the automotive industry should soon be overcome,” according to the report. Improving business confidence suggests “a significant expansion of economic output is expected again in the current quarter.”

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