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German growth to remain weak in first quarter as coronavirus hits: Bundesbank

FRANKFURT (Reuters) – German economic growth will remain weak in the first quarter of 2020, weighed down by weak exports and the coronavirus outbreak in China, the Bundesbank said in a regular economic report on Monday.

Europe’s largest economy stagnated in the fourth quarter and expanded by just 0.6% in all of last year as its vast manufacturing sector fell into recession, spreading gloom across much of the euro zone.

“For the first quarter of 2020, there are no signs of a fundamental change in Germany’s economy,” the Bundesbank said. “With the appearance of the coronavirus in China at the beginning of 2020, a new layer of risk was added.”

It added the virus could disrupt global value chains and could lead to delivery bottlenecks for German companies.

The German economy will remain driven by domestic consumption thanks to rising wages, a robust labor market and a strong construction sector.

But industry will weigh on growth, even if sentiment indicators around the turn of the year appeared more benign, suggesting some improvement.

(Reporting by Balazs Koranyi; Editing by Francesco Canepa)