-Bundesbank
Over the last several weeks we have been monitoring statistics from Europe's powerhouse very carefully, as the whole region is highly dependent on its largest economy. Mario Draghi is concerned about persistently low inflation, but what we have not heard from him for a while, is any comments about the economic growth. Moreover, the latest GDP report had almost no impact on markets, even though the figure was revised to the downside.
This week we have received an official confirmation that Europe's powerhouse is slowing. German Bundesbank said that economic output will slow in the second quarter, as growth in industrial orders decelerated after a solid footing over the first two months of the year. The mild weather conditions is also likely to squeeze growth. German central bank is pencilling in expansion of 1.7% this year, and expecting a 2% growth in 2015. Another reason for a slowdown, is prolonged Ukraine crisis, which is dampening investors' optimism. Nevertheless, the recovery is still on a board, as growth is expected to more than quadruple in 2014.
At the same time, the Bundesbank put the forecasts made by the IMF under scrutiny, questioning the link between inflationary pressure in the block and business cycle, adding to evidence Germany sees no risks of deflation.
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