Ger­man growth hits speed bump

The Myanmar Times - - Business -

GER­MAN eco­nomic growth slowed more sharply than ex­pected in the third quar­ter, of­fi­cial data showed yes­ter­day, but an­a­lysts see Europe’s largest econ­omy bounc­ing back at year’s end.

Gross do­mes­tic prod­uct grew by 0.2 per­cent com­pared with the sec­ond quar­ter, ad­just­ing for price, sea­sonal and cal­en­dar ef­fects, the fed­eral statis­tics of­fice Des­tatis said in pro­vi­sional fig­ures.

An­a­lysts sur­veyed by Fact­set had fore­cast growth of 0.3pc be­tween July and Septem­ber, af­ter the econ­omy ex­panded by 0.4pc in the sec­ond quar­ter and 0.7 in the first.

Slower third-quar­ter growth “points to­wards a bump in the road but not to a turn­ing to­wards gen­eral and longer last­ing weak­ness”, Uni­credit econ­o­mist An­dreas Rees wrote.

Most of the growth was driven by do­mes­tic con­sump­tion, Des­tatis said, with rises in both house­hold and pub­lic spend­ing.

Mean­while, ex­ports - long the mo­tor of the Ger­man econ­omy - slowed slightly com­pared with April-to-June, along­side a small in­crease in im­ports.

But a pos­i­tive pur­chas­ing man­agers’ sur­vey - an in­di­ca­tor of fu­ture ac­tiv­ity in Oc­to­ber and business con­fi­dence at a two-year-high have stoked hopes of an eco­nomic re­bound in the fi­nal quar­ter. Pri­vate con­sump­tion is ex­pected to re­main strong, while im­proved in­di­ca­tors abroad point to re­newed growth for ex­porters, an­a­lyst An­dreas Scheuerle of Deka bank wrote.

“‘Sum­mer­time Blues’ should be fol­lowed by a health­ier-sound­ing ‘Rock­ing around the Christ­mas Tree’,” he pre­dicted.

The Bun­des­bank, Ger­many’s cen­tral bank, ex­pects the econ­omy to grow by 1.7pc over the full year, while the fed­eral gov­ern­ment projects a slightly more op­ti­mistic 1.8pc.

Ob­servers will look to a business con­fi­dence sur­vey later in Novem­ber for signs of how the econ­omy will re­act to Don­ald Trump’s elec­tion as US pres­i­dent, Uni­credit’s Rees noted.

Mr Trump’s anti-trade cam­paign rhetoric could sig­nal new head­winds for Ger­man busi­nesses, which ex­ported more to the US than to any other coun­try in 2015, at al­most 114 bil­lion euros (US$123 bil­lion) ac­cord­ing to Des­tatis data.

“A more iso­lated US econ­omy would be bad for trade and thus Ger­man ex­porters,” Jo­hannes Gareis of Natixis bank wrote.

On the other hand, “The Ger­man econ­omy might ben­e­fit from Trump if his plans to cut taxes and to in­crease in­fra­struc­ture spend­ing suc­ceed in boost­ing the US econ­omy,” he went on.

Ger­man fears of a blow to trade from June’s shock vote by Bri­tish cit­i­zens to quit the Euro­pean Union have re­ceded as it be­comes clear that di­vorce pro­ceed­ings will be drawn out over years.

The ref­er­en­dum re­sult prompted a plunge in Ger­man business con­fi­dence in July and Au­gust be­fore the mood re­cov­ered in Septem­ber and Oc­to­ber.

Bri­tain is Ger­many’s third-largest ex­port cus­tomer af­ter the US and France, buy­ing 89 bil­lion euros of Ger­man prod­ucts in 2015.

Newspapers in English

Newspapers from Myanmar

© PressReader. All rights reserved.