The German statistical office just released its first estimate of 1Q GDP growth, showing that the economy has left contractionary territory. German GDP grew by 0.1% QoQ in 1Q, from a 0.7% decline in the final quarter of 2012. On the year, the economy shrank by 1.4%. The GDP components will only be released on 24 May but available monthly data and the statistical office’s press release suggest that consumption was the sole growth driver. Investment and construction were drags on growth.
The first three months of the year were bumpy but at least ended with a
small happy end for the economy. Hard data could not entirely live up to
the expectations soft data had raised. The reason for this decoupling
of hard and soft data is clearly the weather. The harsh winter weather
did not only affect the construction sector but indirectly also other
Looking ahead, prospects for the German economy are further clearing up.
The industry is gaining pace as order books have started to fill again
and companies are cautiously stepping up their investment plans.
Moreover, domestic demand with the solid labour market and wage
increases have become a reliable growth driver.
All in all, the German economy has left recessionary territory quickly
again, even if it has not been a vintage performance so far. The strong
interconnection between the German economy and the weather remains
remarkable. Not only has the harsh winter weather taken a huge toll on
the entire economy, the economy also seems to copy recent weather
variations. In fact, maybe the recovery is just like this year's
springtime. First it is delayed, then it comes with ups and down and
when it is finally here, hardly anyone notices.