Preliminary growth in Germany at 0.3% q/q was only half the rate expected. The structure of growth, however, was broadly as expected. There is no detailed GDP breakdown yet, but the statistical office indicated that private consumption as well as investment spending increased. As for foreign trade, imports increase much more than exports. The strong increase in imports of possibly 2% q/q caused the downside GDP surprise. A rise in imports arithmetically weighs on GDP growth but is not a bad sign when it reflects robust domestic demand. Moreover, the strong rise in import volumes (that also shows up in French numbers) has very likely to do with the decline in oil prices. In Q2, foreign trade can easily contribute positive to GDP growth.The true speed of the Germany economy is between numbers from Q4 (0.7% q/q) and Q1 (0.3%). The German economy is doing fine, with growth driven by domestic demand for quite a while now, while the export/manufacturing sector suffers somewhat from the subdued growth in global trade, notes Nordea Research.
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