FRANKFURT, Feb 19 (Reuters) – The German economy continues to recover, although expansion in the first quarter will be weak, with a pickup expected only from the spring, the Bundesbank said in a monthly economic report on Thursday.
Germany, Europe’s largest economy, has been stagnant for the past three years but a government spending spree, a strong labour market and pent-up household savings are fuelling optimism for a rebound.
“The economy is expected to continue its recovery in the first quarter, albeit with weak momentum,” the Bundesbank said. “From spring onwards, the German economy is expected to grow more dynamically, driven primarily by fiscal stimulus.”
Construction is likely to take a hit from poor weather in the quarter and private consumption is unlikely to remain at an elevated level, the central bank said.
While industry has seen some large orders, they are likely related to higher government spending on defence and infrastructure, and the sector’s competitiveness on export markets remains relatively weak.
The Bundesbank earlier forecast German economic growth below 1% this year with most of that growth skewed towards the second half of the year.
(Reporting by Balazs Koranyi; Editing by Anil D’Silva)
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