The German central bank has sharply reduced its 2013 growth outlook, even forecasting German output to shrink this winter. But it presumes the slowdown to be only a brief pause on the way back to stronger growth in 2014.
Sluggish global growth and the European recession caused the German Bundesbank to sharply revise downward its growth expectation for Europe's biggest economy from a previously forecast rate of 1.6 percent to just 0.4 percent in 2013.
Releasing its regular winter forecast on Friday, the central bank also cut its growth estimate for this year from one percent to 0.7 percent.
"Growth prospects have substantially dimmed," the bank said in the report, and would even point to a decline in economic activity for the current six-month winter period.
However, there was "substantial reason" to believe that the economic downturn wasn't prolonged, and that the German economy would return to robust growth at the end of 2013, the report added.
"Germany's good fundamentals point to the weakness being only of a preliminary nature with little damage expected to be done especially to the labor market," said Bundesbank President Jens Weidmann.
In its outlook for 2014, the Bundesbank predicts the German economy to grow by 1.9 percent, but noted that the estimate was based on a high degree of uncertainty. While a quicker-than-expected recovery in the eurozone would foster higher growth, the bank admitted that downside risks such as weaker global growth and a worsening of the eurozone debt crisis were more likely to materialize.
uhe / jlw (dpa, dapd)