Germany GDP Q1 2017


Germany: GDP growth accelerates at the start of 2017

May 23, 2017

The pickup in GDP growth in the first quarter of 2017 was confirmed by detailed data published by Destatis on 23 May. GDP grew 0.6% quarter-on-quarter, up from 0.4% in Q4. The result was in line with both the flash estimate and market expectations. The acceleration was broad-based, with both domestic demand and net exports contributing to growth. On an annual basis, GDP expanded 2.9% in Q1, up from Q4’s 1.3%.

The components of domestic demand improved across the board, building on Q4’s trend. Fixed investment grew 1.7% in Q1, following a 0.4% expansion in Q4. The uptick was fueled by multi-year high business confidence and the amplifying boom in the construction sector, as the country attempts to remedy its housing shortfall. Private consumption growth also picked up, albeit at a more moderate pace, inching up from 0.2% in Q4 to 0.4% in Q1. Household spending has been buoyed by continued robust wage growth, a tightening labor market and high consumer confidence.

The external sector’s net contribution to overall growth turned positive and rose to 0.5 percentage points in Q1, in stark contrast with Q4’s minus 0.2 percentage-point contribution. The improvement came on the back of a steep slowdown in import growth, which fell from 2.5% in Q4 to 0.4% in Q1. Export growth also slowed, falling to 1.3% from 1.7% in Q4.

Against this backdrop, German GDP growth is expected to slow but remain fairly robust. The government expects economic activity to increase 1.5% in 2017 and 1.6% in 2018. FocusEconomics Consensus Forecast panelists have similar expectations to the government and foresee economic activity expanding at a broadly steady pace of 1.6% in 2017, which is unchanged from last month’s forecast. For 2018, the panel also forecasts GDP growth of 1.6%.

Author:, Economist

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Germany GDP Chart

Germany GDP Q1 2017 0

Note: Quarter-on-quarter changes of seasonally adjusted GDP and year-on-year variation in %.
Source: Federal Statistics Office (Destatis) and FocusEconomics Consensus Forecast

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