The German central bank Bundesbank has painted a somewhat bleak picture about the economy in 2020 in its most recent biannual report. Even though exports are expected to bounce back, household spending is likely to contract, as a result of which, the German economy is expected to grow at half the pace than previously forecast.

Bundesbank has revised its real GDP growth for 2020 to 0.6%, aligned with private sector forecasts. On account of a weakening in disposable income driven by a slowdown in employment growth, the bank states, “Growth in domestic demand will probably not be as dynamic as it was during the boom period of previous years”.

The central bank has also lowered its GDP forecast for 2019 to 0.5% from its previous forecast of 0.6%, while it feels more optimistic about economic growth picking up in 2021. In its latest estimates, Bundesbank expects GDP growth to rise to 1.4% in 2021.