Bundesbank Sees Strong German Growth Continuing

The German economy is expected to continue its strong growth trend in the current quarter on the back of industrial exports, the country's central bank said Monday.

The outlook should bode well for incumbent Chancellor Angela Merkel ahead of elections on Sept. 24. Ms. Merkel is hoping for a fourth term leading the European powerhouse.

The comments from Germany's central bank follow official data last week that showed the German economy grew by 0.6% in quarterly terms, or 2.5% in annualized terms, in the second quarter, following annualized growth of 2.9% in the first quarter. Germany's statistics office is due to publish detailed data on economic output on Aug. 25.

"The strong economic upturn in the German economy is expected to continue in the third quarter, with industrial output probably continuing to play an important role, thanks to a substantial expansion in exports," said the central bank in its monthly bulletin.

The central bank said that record sentiment in manufacturing, strong new orders, and a significant stock of orders still being worked through all "suggest that industrial output can be expected to grow significantly again in the current quarter."

The Bundesbank said that recent developments in the construction sector suggest slowing momentum. For consumers, the outlook, however, remains bright amid a strong labor market and positive income outlook.

"The German economy in the current year could therefore perform even somewhat more strongly than forecast in the June projection," said the Bundesbank. In June, the Bundesbank predicted calendar-adjusted growth of 1.9% this year.

The bank also noted that survey data suggest that discussions about banning older diesel cars from some German cities haven't significantly affected the mood among companies in the automotive sector.

Investors will be closely watching the results of the monthly Ifo survey due out Friday. Economists polled by The Wall Street Journal expect the index to fall to 115.5, from July's record reading of 116.0.

Write to Todd Buell at todd.buell@wsj.com

(END) Dow Jones Newswires

August 21, 2017 06:14 ET (10:14 GMT)