The economic upturn in advanced economies is proving to be robust to the emerging market turmoil and the drop in commodity prices seem to be the reflection of the global slowdown rather than its cause, Germany's central bank said on Monday.
The European Central Bank will decide in December whether the euro area needs more monetary stimulus to boost inflation as the economic recovery appears to be losing some steam and risks to forecasts have increased, partly due to slower growth in China and other emerging markets.
The Bundesbank, whose president Jens Weidmann is a prominent hawk on the ECB's Governing Council, said in its November report concerns about the emerging economies, especially China, have been high but their performance appears not to have deteriorate further over the past month. It added the bulk of the expected global slowdown seems to be happening in countries relying on raw material production. "By contrast, a decline in aggregate demand in commodity consuming regions has not been observed," the Bundesbank said in the report. "All in all, this seems to illustrate regional growth differences and that the global slowdown is more likely a reflection of the drop in commodity prices, not its cause," the Bundesbank said.
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