'The basic movement is still along the bottom; the recessive tendencies have still not been fully overcome,' wrote the bank in its monthly report.
In contrast to earlier provisional data from the Statistics Office which showed western German GDP unchanged in the fourth quarter of 1993 from the third quarter, the Bundesbank said there had actually been a decline of 0.5 per cent. This drop should not been seen as the advent of a new dip, but it does underline the persistent fragility of the economy, the report said.
'The main weaknesses are now to be found in private consumption and investment,' the Bundesbank wrote. Retail consumption dropped by 2 per cent in the final quarter of last year from the previous period. Income growth is being more than eaten up by inflation and increases in taxes. Despite evidence of an improving mood in industry, investment intentions remain very weak. 'The under- utilisation of capacity is so great that investments do not appear pressing, except for rationalisation purposes,' the report said. In relation to real GDP, western German investment in 1993 fell back to the level of 1985.
The main hope for recovery lies with export demand, according to the Bundesbank.Reuse content