Economic output in Germany dipped slightly in the third quarter of 2018. As the Deutsche Bundesbank's latest Monthly Report explains, this was caused by one-off factors. “Despite these temporary one-off effects, the economic boom in Germany continues,” write the Bundesbank’s economists.

Times of strong growth and low interest rates have seen vulnerabilities build up in the German financial system. In addition, the probability of an economic downturn has increased. “Now is the time to build up sufficient capital and strengthen the financial system’s defences,” said Bundesbank Vice-President Claudia Buch at the press conference on the publication of the new Financial Stability Review.

After the year got off to a moderate start, the German economy rebounded quite strongly in the second quarter of 2018. The Bundesbank believes that the German economy is likely to remain on a sound growth path in the current quarter. However, as is explained further in the August issue of the Monthly Report, the pace of growth could tail off slightly.

Bundesbank President Jens Weidmann has called for further reform steps in Europe. "Much has been done – in the member states as well as at the European level," Weidmann said in Athens. Despite this progress, there is still need for further action, he said.

Bundesbank President Jens Weidmann has spoken out in favour of taking advantage of the good global economic outlook to implement reforms. It is now vital to "push ahead with structural reforms that put national economies on a path of sustainable, higher growth," he said at a joint press conference with Federal Finance Minister Wolfgang Schäuble on the sidelines of the Annual Meetings of the International Monetary Fund and the World Bank in Washington, DC.