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German growth set for dip

April 28, 2014

The German economy is heading for a significant slowdown between April and June after robust growth in the first quarter, according to the Bundesbank. The central bank bases the forecast on a drop in industrial orders.

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After an extremely strong start into 2014, the German economy was set for a noticeable dip in the second quarter of the year, the German Bundesbank said in its monthly report for April released Monday.

Growth in industrial orders had not continued with the same intensity as in the first two months of the year, the central bank said in the report.

The mild winter at the beginning of the year, which resulted in strong economic expansion, would also mean that the rate of growth would be squeezed in the next quarter.

“The underlying economic trend, however, is expected to remain clearly on the up due to the exceptionally favorable consumption climate and the active demand for home building,” the Bundesbank added. Rising imports and growing employment also suggested the upswing would continue in the long term.

The bank did not give a growth figure for the first quarter, or a forecast for the second quarter. Still, it did not lower its previous full-year growth estimate of 1.7 percent for 2014, to be followed by 2 percent in 2015.

Analysts polled by Reuters news agency have penciled in first-quarter growth of 0.6 percent for Europe's biggest economy after 0.4 percent at the end of 2013.

uhe (Reuters, AFP, dpa)