1. Hello Guest Click here to check FX Binary Point Financial Directory

Germany: Consumer saved German economy in Q3 - ING

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Nov 26, 2015.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
    Likes Received:
    FXStreet (Guatemala) - Analysts at ING noted that the German GDP growth in Q3 was confirmed at 0.3% QoQ, mainly driven by domestic factors and was not the nightmare that markets had been predicting.

    Key Quotes:

    "Private consumption and government consumption grew by 0.6% and 1.3% QoQ respectively. At the same time, domestic investments dropped by 0.3% QoQ and net exports shaved off 0.4 percentage points of growth. The fact that inventories contributed positively to GDP growth (0.2 percentage points) does not really bode well for the fourth quarter.

    In fact, at least in the third quarter, the German economy has finally become what many international critics had been demanding for a long while: a domestically-driven economy. Interestingly, since the third quarter of 2014, private consumption private consumption has now been on the strongest non-stop expansion since the start of the monetary union. Record high employment, increased nominal wages, low interest rates and low energy prices remain an important growth driver for the economy.

    Now that the year 2015 has entered home stretch, the year in review stories will again become popular. Looking in the rear-mirror, the year 2015 has been another rollercoaster ride for the economy even if most Germans hardly noticed it. However, the series of external (and sometimes even domestic) shocks the German economy was confronted with has been impressive. Just think of sanctions for Russia, Greece dancing on the edge of an euro exit, China’s slowdown, emerging market troubles, VW, refugees and now terroristic attacks. Needless to say that most – if not all – of these challenges or factors will still be in place next year.

    To cope with the ongoing and new challenges, the economy will need a more sustainable investment boost. Just banking on the current strength of domestic consumption could be a dangerous strategy. Moreover, a possible consumptive expansion of fiscal policies would obviously increase short-term growth prospects but would do little to substantially increase the economy’s growth potential. Particularly in a possible scenario, in which new uncertainties resulting from the terroristic attacks could further dent investment activity.

    In short, the second estimate of German Q3 GDP data confirmed that the worst nightmares have not come true. Consumers saved the economy and offset the industrial slump of the summer months, yielding the German economy’s fifth consecutive quarter with positive growth."
    For more information, read our latest forex news.

Share This Page