Carsten Brzeski, chief economist at ING, notes that the German economy grew by 0.4% QoQ in the first quarter of the year, from 0.0% in 4Q18 and -0.2% in 2Q18, while for the year, GDP was up by 0.7%, when adjusted for seasonal and calendar effects.

Key Quotes

“GDP components will only be released at the end of the month but according to available monthly data and the press release of the German statistical agency, growth was mainly driven by private consumption, investments and construction. Government spending was slightly negative.”

“Today’s GDP data is balm for the soul of the German economy. It also confirms our long held view that not all is bad in the German economy. Some of last year’s one-off factors have turned around, the German automotive industry might have seen better times but should not be written off and private consumption remains solid. In fact, the ongoing dichotomy between struggling industry and strong domestic demand continues and at least this time around ended with a positive outcome.”

“Today’s German GDP data are in our view not necessarily the “return of the living dead” as we still see the growth potential of the German economy, particularly if investments finally pick up. Instead, strong German data are rather another illustration that the condemned (often) live longer.”

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