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German economy stagnating or shrinking amid second wave of virus: Bundesbank

FILE PHOTO: A worker wears a protective mask at the Volkswagen assembly line after VW re-starts Europe's largest car factory after coronavirus shutdown in Wolfsburg, Germany, April 27, 2020, as the spread of the coronavirus disease (COVID-19) continues. Swen Pfoertner/Pool via REUTERS/File Photo

FRANKFURT (Reuters) - The German economy is likely stagnating or contracting as measures taken at home and abroad to contain the second wave of the coronavirus pandemic hit leisure activities as well as exports, the Bundesbank said on Monday.

With schools open and restrictions mainly affecting the catering and hospitality sectors, Germany has taken a softer approach than some of its neighbours but was still bound to suffer from weaker demand from abroad.

“Overall economic performance could stagnate or even decline after very vigorous growth in the summer,” the Bundesbank said in its monthly report.

But the German central bank said an economic slump like the one seen in the spring was unlikely and progress on the development of a vaccine against COVID-19 boosted hopes of finding a balance “soon” between containing the virus and keeping the economy open.

German Chancellor Angela Merkel and the premiers of Germany’s states will meet on Monday to extend restrictions that were originally due to last until the end of November.

Reporting by Francesco Canepa, editing by Ed Osmond

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