Germany: External demand drags down economic growth in Q3
November 22, 2013
In the third quarter, GDP increased a seasonally-adjusted 0.3% over the previous quarter. The reading represents a deceleration compared to the 0.7% growth rate observed in the second quarter but was in line with market expectations. Compared to the same quarter last year, GDP increased 1.1% in Q3, which was up from the 0.9% expansion tallied in Q2.
Domestic demand didn't improve significantly in Q3. While private consumption expanded 0.1% quarter-on-quarter (Q2: +0.6% quarter-on-quarter), government spending increased 0.5% over the previous quarter, which marked a remarkable expansion over the 0.2% contraction seen in Q2 (previously reported: +0.6% qoq). Gross fixed investment is still the main driver of growth; it expanded 1.6% in Q3, which was the same pace as in Q2.
The external side of the economy was mainly responsible for the deceleration recorded in Q3. Exports of goods and services increased a meager 0.1% in Q3 (Q2: +2.4% qoq). Imports grew 0.8% in Q3, which was down from the 1.9% increase observed in Q2. Consequently, the external sector's net contribution to overall economic growth swung from plus 0.4 percentage points in Q2 (previously reported: plus 0.2 percentage points) to minus 0.3 percentage points in Q3.
Bundesbank expects the economy to grow 0.3% this year. For 2014, the Bank sees economic growth accelerating to 1.5%. FocusEconomics Consensus Forecasts panelists are more optimistic than the official estimates and expect economic activity to expand 0.6% in 2013, which is up 0.1 percentage points from last month's projection. For 2014, the panel forecasts GDP to accelerate to 1.7%, which is down 0.1 percentage points from last month's estimate.
Author: Ricardo Aceves, Senior Economist