Locked-down German economy likely subdued in coming weeks - Finance Minister

BERLIN (Reuters) - Lockdown measures in Germany and weak sentiment point to subdued economic activity in Europe's largest economy in the coming weeks, the Finance Ministry said in its monthly report on Friday.

Leading indicators also point to the economy being divided, with industrial production supporting growth and services impacted by lockdown measures, the ministry added.

Chancellor Angela Merkel has urged Germans to have a little more patience, after she agreed with regional leaders to extend the coronavirus lockdown until March 7.

"The continuing measures to contain the spread of the virus ... as well as sentiment indicators suggest that for the next few weeks, overall economic development is expected to remain subdued," the ministry said in the report.

German business morale slumped to a six-month low in January as a second wave of COVID-19 halted an economic recovery, the Ifo economic institute said.

Tax revenues fell 11.1% on the year in January, hit by the economic fallout of the coronavirus pandemic, the ministry said.

It attributed a jump in annual inflation last month to the expiry of a reduced sales tax rate and higher energy prices, adding that "positive inflation rates of a similar magnitude can be expected in the coming months."

(Writing by Paul Carrel; Editing by Hugh Lawson)

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