BERLIN Nov 19 Europe's powerhouse Germany will
likely lose further momentum at year-end as its economy is now
feeling the brunt of the euro zone debt crisis and a global
slowdown, the Bundesbank said on Monday.
The central bank said in its monthly report for November
that more and more sectors no longer expected the economy to
recover quickly but instead saw the euro zone debt crisis and
global slowdown weighing on large parts of the economy.
"The economy currently presents a mixed picture, which is
likely to cool further towards year-end," the Bundesbank wrote
in the report.
"By now it has become unmistakable that the disturbing
external factors are affecting the willingness to invest and job
planning so strongly that the whole economy could be affected."
Germany's economy slowed to 0.2 percent growth in seasonally
adjusted terms in the third quarter, flash data from the
Statistics Office showed last week, and economists expect it to
shrink this quarter.
Until this year, Germany had escaped the euro zone's
problems largely unscathed, growing by a record 4.2 percent in
2010 and by 3 percent last year even as other euro zone states
were in recession and some sought bailouts.
But recent data has shown even Europe's paymaster is taking
a knock. The private sector is shrinking, while sentiment
surveys are sinking, unemployment is on the rise and output is
The Bundesbank said that the jobs market would also be
affected after significant income increases - following strong
wage rounds after years of restraint. Unemployment has risen
from post-reunification lows in recent months.
"Cyclical headwinds will also influence the labour market in
(the fourth quarter of this year and the first quarter of
next)," the Bundesbank wrote.