German economy likely grew 0.7 pct sequentially in Q1, GDP to expand 2 pct this year

The German economic growth data for the first quarter of 2017 is set to come out tomorrow. The GDP is expected to have expanded 0.7 percent sequentially in the March quarter, according to a Nordea Bank research report. Construction output and manufacturing production both rose robustly in the period. Net exports are likely to have added to the growth as well. Confidence indicators imply similar growth for the second quarter.

“We raise our GDP growth forecast for this year to 2 percent (from 1.7 percent) and for next year to 1.8 percent (from 1.6 percent)”, stated Nordea Bank.

Private consumption and investment spending are expected to mainly drive the German economic growth in 2017 as well as in 2018. While employment is expected to continue growing at about 1 percent to 1.5 percent per year, higher inflation lowers real income growth.

Export expectations have rebounded noticeably, but the contribution from net exports to growth might be small as import growth is expected to outpace growth in exports, added Nordea Bank.