German economic growth gains momentum, says Bundesbank (Roundup)

Jul 19, 2010, 16:27 GMT

Frankfurt - Germany's economic pickup gained momentum during the second quarter, the nation's central bank said Monday.

Writing in its latest monthly bulletin, the Bundesbank said it expected Europe's biggest economy to post strong expansion in the second quarter as an upswing in global growth powers German exports.

In particular, German economic growth had gained ground in recent months, the Bundesbank said in its July monthly report.

'Real gross domestic product therefore should increase at an extraordinarily strong pace in the second quarter,' the bank said.

The Bundesbank's bulletin is the latest sign that the German economy has managed to withstand the financial crisis that hit several eurozone member states during the first half of the year.

'Dynamic global growth remained the main driver for the German economy,' the Bundesbank said.

The bank also rejected talk that Germany could slump back into recession about 12 months after it emerged from what was its steepest economic downturn in more than 60 years.

There was no risk the economy will 'slide back into recession,' the Bundesbank said.

But the central bank warned that nations with large current account deficits still threatened to undercut the economic upswing underway in Germany.

Last month, Frankfurt-based Bundesbank raised its German growth forecasts for 2010 and 2011.

It now expects the country to post a solid 1.9-per-cent growth rate this year before slowing to 1.4 per cent next year.