german q1 gdp growth review
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QUARTERLY RATE MEETS EXPECTATIONS, ANNUAL RATE MISSES

- German Q1 Quarterly Growth Matches Estimate

- German Annual Headline Rate Short Of Consensus

 

Frankfurt, 15 May (LS NEWS) – Germany’s quarterly growth rate in the first quarter mirrored the estimate, but the annual rate in Europe’s biggest economy fell short of expectations. The euro and German bonds were little changed on the news.

 

Seasonally adjusted growth from January through March rose 0.4pct compared to the previous quarter, when growth was flat. The unadjusted annual rate slipped to 0.6pct, leaving it below the 0.7pct consensus and the 0.9pct rate in Q4. The Q1 annual rate exceeded last week’s EU Commission forecast for full year German growth of 0.5pct, which is also Berlin’s current prediction.

 

The German federal statistics office said overall growth was supported by construction, investments, and private consumption, but government spending declined in the period.

Source: Pantheon Macroeconomics
Source: Pantheon Macroeconomics

Uncertainty Remains

 

Reuters quoted German Economy Minister Peter Altmaier as saying the growth figures were a “first ray of hope” but no reason to give an all-clear due to international trade disputes.

 

ING Chief Economist Carsten Brzeski said: “The German economy is indeed facing several new and existing headwinds in the months ahead. The small relief from global trade and China could easily disappear and turn into even stronger headwinds if the trade war between the US and China escalates. Also, higher oil prices are likely to dent consumer spending and put additional pressure on corporate profit margins.”

 

An Asia-based analyst noted, “It looks like Europe’s economy is not as dismal as a lot of people had expected.”

 

Claus Vistesen, chief Eurozone economist at Pantheon Macroeconomics, said: “All in all, a great start to the year, but it probably won’t last. We are fairly certain that inventories were a big driver of the jump in gross investment, and we fear a setback in Q2. By contrast, we think private consumption will continue to do well.

 

“Our baseline for Q2 GDP is 0.2pct quarter-on-quarter, until proven otherwise by the hard data.”

 

--- Eric Culp

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