German economy to post robust growth rate in H2

The German economy likely to perform well in H2. Barclays sees a robust perfromance of the economy from the following aspects

• German's domestic demand remains the key growth driver of the economy, due to solid consumer demand and rising investment. The decline in oil prices boosted households' purchasing power and labour and housing markets remain in robust shape.
  
  
• A soft patch in global demand weighed on growth in Q1: exports slowed further, reflecting a slump in shipments to several major emerging markets and OPEC countries, with China and Russia the two black spots. Q2 should have been better and a robust performance is expected in H2, says Barclays.
  
  
• The US is set to become the most important export destination for German firms this year, exceeding France for the first time in decades. Exports to euro area countries are recovering gradually, but their relative share (about 35%) remains far below the early-2000 level (45%).
  
  
• The solid labour market, together with record low interest rates and substantial net migration, has boosted demand for housing. Equipment investment has also picked up and domestic factory orders for capital goods indicate that better investment activity should last for the rest of this year.
  
  
• Balanced budget remains a government priority, but stronger fiscal numbers have created some space for modest stimulus. Next year, the government gross debt to GDP ratio should fall below 70% and could drop below 60% by 2020.