Bundesbank says Germany’s GDP has lost some of its pace

GROWTH in the German economy has slowed since a strong run in the first quarter of the year, according to the country’s central bank.

The Bundesbank’s latest update suggests GDP will rise at a less rapid pace in the second quarter after a 0.8 per cent boost in the first three months of the year.

For this year and the two ahead, growth is expected to hover between 1.8 and two per cent. The institution also expects inflation to remain relatively low this year, at just 1.1 per cent.

Yesterday, official Eurozone statistics showed that inflation fell to just 0.5 per cent for the currency union in May, confirming the joint-lowest reading since 2009 for the region.

German inflation was much lower than the Bundesbank’s 2014 forecast last month, falling to 0.6 per cent and helping to drag the overall index down.

“There is clearly a very real risk that Eurozone consumer price inflation could go lower still and it certainly looks unlikely to move markedly higher any time soon,” said IHS Global Insight chief economist Howard Archer.