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How Worrying Is the Recent Downgrading of German Growth Forecasts?

Alvaro Leandro and Jeromin Zettelmeyer, (2019), “Ηow Worrying Is the Recent Downgrading of German Growth Forecasts?”, Peterson Institute for International Economics, 15 March

Growth in Germany has been very weak since the third quarter of 2018. The reason is a combination of one-off factors, including a drought and a new EU emissions testing procedure, which held back car sales last year, as well as cooling demand for German exports. As a result, growth projections for 2019 have been steadily downgraded, contributing to a sense of gloom. But observers of the German economy should not worry too much about the recent downgrades in growth forecasts, because these do not, in fact, imply pessimism about the future. They merely reflect the slowdown that has already happened, not expectations that the slowdown will continue.

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