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- Germany's Q2 GDP details hint a "technical" but no "severe recession" – Deutsche Bank
Germany's Q2 GDP details hint a "technical" but no "severe recession" – Deutsche Bank
Analysts at Deutsche Bank note that today's 2nd release confirmed the preliminary reading of the German Q2 GDP growth of -0.1% qoq and corrected for the lower number of working days it was up 0.4% while domestic demand rose a healthy 0.5% qoq.
- “Net trade subtracted a 0.5 pp from Q2 GDP growth with exports falling a hefty 1.3% qoq while imports decreased by 0.3% qoq.
- Capex investment picked up by 0.6% qoq (Q1: 1.4%) while construction investments were down 1.0% qoq (Q1: 2.5%), partly a payback for the weather-related surge in Q1.
- In H1 the German government sector recorded a surplus of EUR 45.3 bn (or 2.7% of GDP). That said, it is important to note that these figures are preliminary and have only limited informative value for the overall 2019 budget results.
- Yesterday's sharper than expected drop in the ifo climate index was part of a row of negative sentiment and hard data, particularly for manufacturing. This supports our expectation that GDP will shrink by around ¼% qoq in Q3, pushing the German economy into a "technical recession".”
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