IMF cuts German GDP forecast on Eurozone uncertainty

The IMF has cut its German 2013 GDP forecast from 0.6 per cent to 0.3 per cent. It cites uncertainty around the Eurozone as a major drag and continuining banking system vulnerabilities.

Headlines from the IMF's mission report:

1. Growth in 2013 is expected to be weak.

2. We see risks to the outlook as tilted to the downside.

The fiscal policy stance is appropriate under the baseline

3. The marginal loosening of the fiscal stance this year is appropriate.

4. Given the weak growth environment and significant risks to the outlook, it will be important to avoid overperforming on consolidation.

The financial system’s resilience has improved but the landscape remains unsettled

5. Banking system soundness has improved, but vulnerabilities remain.

6. The financial reform momentum should be sustained both domestically and at the regional level.

The role of Germany as an anchor of stability in Europe

7. Germany’s strong fundamentals provide an anchor of stability to the region.

Securing strong, stable, and balanced growth over the medium term

8. Efforts to support the economy’s growth potential need to be sustained.

9. Ensuring the long-term sustainability of public finances in the face of rising demographic pressures requires a multi-pronged strategy.