Germany's central bank believes growth in the country will come to a standstill in the final quarter of the year. It speaks of a logical consequence of the eurozone debt crisis continuing to bite on the continent.
The German Bundesbank warned on Monday growth in Europe's biggest economy was likely to experience a sharp slowdown in the fourth quarter of 2012. The central bank said in its latest monthly report that the economy might even contract between October and December.
Despite a sovereign debt crisis lingering on in much of Europe, Germany managed to post 0.5-percent growth in the first quarter, followed by 0.3 percent in the second.
"But there are increasing signs that following a noticeable expansion in output in the third quarter we might see stagnation or even a slight contraction in gross domestic product (GDP) in the final quarter," the Bundesbank said in a statement.
Shipments abroad most affected
Despite a recent pick-up in industrial output in the country, Germany's export-oriented economy would not be able to buck the trend forever, the central bank maintained. It felt its own interpretation of future growth prospects in the country was backed up by a continuing drop in investor sentiment over many months.
Weaker demand from eurozone nations, the United States and China were expected to finally impact Germany with a vengeance.
"Surveys are reflecting the gloomy outlook for exports and uncertainty about the prospects for global economic developments," the Bundesbank wrote in its report. Since the peak of the global financial crisis in early 2009, Germany's economy has only contracted once, in the fourth quarter of last year when GDP dipped by 0.1 percent.