FRANKFURT (MNI) - The German economy has benefited from the global recovery but a sustained upswing is not yet assured, the Bundesbank said in its Monthly Bulletin Thursday.

"The economic recovery is...still not without risks," the report warned, after Germany reported a 0.7% q/q GDP growth rate in the third quarter, leading the eurozone out of recession.

Looking ahead, the economy should continue to benefit from public stimulus programs that have yet excercise their full impact domestically and internationally.

At the same time, strong demand for industrial products should support economic activity ahead, the Bundesbank said, pointing to a sharp increase of 8.9% q/q for industrial new orders in the third quarter.

On the downside, positive impulses from the inventory cycle are unlikely to increase further in the months ahead, while support from private consumption is seen easing in the second half of the year, the central bank said.

In addition, the report warned that a "necessary correction of marcroeconomic imbalances" may limit the growth dynamic of key foreign markets and may result in shifts in global exchange rates. Finally, the Bundesbank said that risks of fresh financial turbulence undermining the recovery cannot yet be fully discarded.

The German central bank said that "against the backdrop of improving orders, it is not surprising that corporate sentiment has improved further."

However, it warned that the rising confidence --which it sees mainly based on better export prospects -- may yet be exaggerated.