Germany's Minister of Finance Wolfgang Schauble speaks during a discussion on "A Reform Agenda for Europe's Leaders"
Germany's Minister of Finance Wolfgang Schauble speaks during a discussion on "A Reform Agenda for Europe's Leaders" during the World Bank/IMF annual meetings in Washington October 9, 2014. Schaeuble said on Thursday more government spending was a wrong cure for the euro zone's weak growth and dismissed the prospect of recession for Europe's biggest economy. Reuters

Germany has reportedly cut its economic growth forecast from 1.8 percent to 1.2 percent, raising concerns about a possible recession in the country and the region. A statement by the Minister of Finance of the Federal Republic of Germany points out the reasons for the cut and highlights the strong positive underlying momentum in the economy despite the recent numbers.

A press release by the Federal Ministry for Economic Affairs and Energy, Germany, had said in September that weather related shifts in production and geopolitical uncertainties in the region were to blame for the slowdown in the second quarter. A report by Bloomberg now says that investor confidence has fallen to the lowest level in two years over recession concerns.

One of the main concerns for Germany is the moderate growth in exports. A Slowdown in international demand has been blamed for this. The global economy is said to be growing largely on account of the U.S and some Asian emerging economies.

In a statement to the IMF, Mr. Wolfgang Schäuble said that Germany's economy is overall in a good shape. Mr. Schäuble is the Minister of Finance of the Federal Republic of Germany. He highlighted the role of domestic demand in Germany, which is expected to expand steadily due to an increase in disposable income and supported by low inflation.

Meanwhile the Zew Indicator of Economic Sentiment for Germany has dropped into the negative territory for the first time since 2012. The report expects a further decline in Germany's economy over the medium term. Geopolitical uncertainty is again cited as the main reason for concern.

The geopolitical considerations in Europe mostly relate to the conflict in Ukraine and the subsequent sanctions on Russia. There are concerns that the sanctions and counter sanctions will eventually draw the whole region into a recession.

Mr. Schäuble has said that the world may be better prepared to deal with the financial risks after the 2008 recession. He however stressed the need to monitor the shadow banking sector and reform the over the counter (OTC) derivatives market. This he hoped will reduce systemic risks and increase transparency.