Net exports contribution in euro area GDP likely to sink

A temporary decline in German car market shares abroad is expected as a result of the VW scandal, although the macroeconomic effect should be limited both in size and over time. 

The euro area exports are likely to grow more in line with foreign demand from H2 15 and therefore to slow as a result of the weakness of the global economic environment, dragged down by a slowdown in China and other EM countries. 

Consequently, net exports in the euro area is likely to contribute only 0.1pp to annual GDP growth in 2016, versus 0.3pp in our July forecast, argues Barclays. August trade data for Germany, just released on 7 August, suggest that this projection is subject to downside risks.