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German GDP paints rosy picture of the economy – Rabobank

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Nov 24, 2015.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

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    FXStreet (Delhi) – Elwin de Groot, Senior Eurozone Strategist at Rabobank, suggests that the German Q3 GDP details confirm our view that the slowdown in emerging markets and ensuing decline in commodity prices is good for consumption but bad for exports and investment.

    Key Quotes

    “The main concern in this scenario is that if investment does not follow, the economy’s long-term growth potential will erode. Overall GDP growth was confirmed at 0.3% QoQ, with consumer spending growing by a relatively buoyant 0.6% QoQ, supported by decent wage gains and low inflation (household disposable income rose 0.9% QoQ).”

    “Exports grew by a measly 0.2% (after 1.8% in Q2), clearly being held down by demand weakness in other parts of the world, whilst imports (unsurprisingly) held up much better rising 1.1% (up from 0.5% in Q2).”

    “The recent weakness in the euro suggests that this pattern will not be repeated in Q4. Capital investment fell 0.3% QoQ after - 0.4% in Q2. In other words, despite record low interest rates and improving domestic demand, investment in Germany is not showing any signs of a lift-off.”
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