Germany’s industrial production likely declined 0.8 pct m/m in March

Industrial production in Germany has surprised on the upside in the first quarter in spite of external obstacles at the beginning of 2016. Even though most of the rise is because of construction activity, manufacturing output is also expected to have grown solidly partially because of solid rebound in motor vehicle production in January, according to Societe Generale. This implies that market concerns during the beginning of 2016 were overstated by risk and were based very little on developments of real economy. It also suggests that the German economy at present is quite resilient to shocks of external demand, said Societe Generale.

“In March we expect a decline in industrial production of 0.8% mom, with risks tilted to the upside”, added Societe Generale.

The German economy is expected to grow at a weaker pace in the second quarter.

Meanwhile, Germany’s exports are likely to have fallen 0.6% m/m in March, whereas imports are expected to have grown 0.2%, noted Societe Generale. The obstacles from external demand continue to be strong; however, the trade balance has not been impacted. Germany’s trade surplus in March is likely to have remained high at EUR 22 billion, said Societe Generale. Germany’s net trade is likely to have quite a negative impact on GDP in real terms in 2016 and will continue to have an effect in the following years, added Societe Generale.