German Q1 GDP likely grew strongly in Q1, economy to be stable for rest of 2016

Germany’s preliminary GDP growth for the first quarter is expected to have accelerated, said Societe Generale in a research report. Domestic demand is again expected to have primarily driven the economic growth. In particular, consumption is expected to have been strong. Private consumption and government consumption is expected to have grown 0.4% and 0.7% respectively, added Societe Generale. Moreover, construction activity is likely to have been stimulated by mild weather during the beginning of 2016; however, this is expected to be for a brief period of time.

Meanwhile, equipment investment is expected to have grown strongly by 1.5% q/q in Q1. This shows sustainable and broad-based growth composition. In the mean time, exports are likely to have grown slightly by 0.2%, whereas imports are expected to have climbed 0.8% in the first quarter of 2016. This shows that net exports contributed negatively to the growth for the third straight quarter. In all, economic activity, especially manufacturing production and investment seem to have performed better than anticipated in the first quarter. Therefore, German economy is likely to be on stable footing for the rest of 2016.

“We expect the preliminary Q1 GDP growth to be confirmed at 0.7% qoq”, noted Societe Generale.