2016.08.2305:05:00UTC+00Net Exports Likely to have Driven German Gdp Growth in Q2

The preliminary estimate of Germany’s second quarter GDP growth came in at 0.4 percent in sequential terms despite the subdued data of retail sales and industrial production. Net exports are expected to have mostly contributed to the second quarter economic growth. Net exports likely added 0.4 percentage points to the GDP growth, while a positive contribution from stock might have offset the expected negative contribution of domestic demand, said Societe Generale in a research report.

This is an alteration from the prevailing trend since mid-2013, when domestic demand mostly contributed to the German GDP growth. However, this is likely to be transitory as solid fundamentals would keep on underpinning demand in years ahead.

Moreover, while exports to China rebounded slightly in the second quarter, it seems that it was mostly weaker imports that signify the stronger net exports in the second quarter that in turn should bounce back in the third quarter, stated Societe Generale.

Meanwhile, private consumption is likely to have grown 0.2 percent in sequential terms in the second quarter and government consumption by 0.5 percent. On the other hand investment is expected to have shrunk 2.1 percent, thanks to softening in construction. Exports are likely to have expanded 0.8 percent quarter-on-quarter, whereas imports might have shrunk 0.3 percent.

“The stronger than expected first half of the year suggests another solid performance of the Germany economy this year, despite the severe headwinds from external demand and Brexit”, added Societe Generale.