German economy could leave pandemic behind in autumn, Bundesbank says

FRANKFURT (Reuters) - The German economy could leave the pandemic behind as soon as the autumn if the vaccination campaign gains speed and curbs to activity are relaxed, the country's central bank said on Friday.

The Bundesbank also predicted that German inflation could briefly hit 4% late this year, albeit partly due to the reversal of an earlier value-added tax cut.

It said German GDP was likely growing substantially this quarter, driven by industrial production and construction, and the economy could surpass its pre-pandemic size in the autumn, as services also spring back to life.

"If there is rapid progress in the vaccination campaign, there is the prospect that restrictions can be significantly eased in the coming months," the Bundesbank said in its monthly report.

"GDP could then grow strongly in the third quarter and surpass its pre-crisis level in the autumn."

It noted that higher raw material and transport costs were already lifting producer prices, but these were only passed on to consumers with a delay and to a limited extent.

(Reporting By Francesco Canepa; Editing by Toby Chopra)

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