Germany: Economy shrinks 0.2% in 3Q – ING

0

According to the first release of the statistical agency, the German economy had its worst performance in 3Q since the first quarter of 2013, shrinking by 0.2 % quarter-on-quarter, notes Carsten Brzeski, Chief Economist at ING.

Key Quotes

“The first quarterly drop since the 1Q 2015. On the year, the economy still grew by 1.1%. The GDP components will only be released at the end of the month but available monthly data suggests that net exports were the main drag on growth, while investments and the construction sector were growth-supportive. Private consumption declined.”

“The disappointing performance of the German economy in the third quarter can be explained by several one-off factors but also some more worrying structural developments.”

“Looking ahead, the late-cycle economy is likely to fluctuate between hopeful and worrying news and developments. Low interest rates, a weak euro and some fiscal stimulus, as well as the reversal of adverse one-off factors, are strong arguments in favour of a growth rebound in the coming quarters. At the same time, however, dropping capacity utilisation and increasing external risks put a lid on any upside potential.”

“In sum, the outlook for the German economy is still positive and swan songs will have a short shelf-life but the reputation of the invincible strong man (or woman) of Europe has received some scratches. After the latest political developments, today’s disappointing growth data is yet another wake-up call that political stability and strong growth are by no means a given.”

Get the 5 most predictable currency pairs

About Author

Comments are closed.