Quarterly Report Germany III/2016

German economy outperforms expectations – but problematic trends persist

Following a strong first six months of the year, we have made a slight upward adjustment to our growth forecast for Germany’s real GDP in 2016 to 1.9 percent over the previous year (up from 1.7 percent).  

The German economy continued to grow in the second quarter, though at a slower pace. GDP increased 0.4 percent over the previous quarter after inflation, calendar and seasonal adjustments, following an increase of 0.7 percent in the first quarter of the year. Compared with the previous year, economic output increased by 1.8 percent after calendar adjustments, which was slightly lower than the 1.9 percent increase recorded at the start of the year.

Economic growth in the second quarter was driven by public and private consumption. Gross fixed capital formation really put the brakes on domestic economic growth. The trade balance, on the other hand, pushed GDP growth up, though on the back of markedly weak imports rather than booming exports.

We are expecting a further upturn in investment activity this year, driven primarily by construction investment with equipment spending set to remain on the moderate side. Consumption will also be providing some momentum, with public sector spending looking to be the main force. The trade balance is likely to pull down growth, with the weak global economy curbing exports.

Contact

Dr. Klaus Günter Deutsch
Head of Department
Research, Industrial and Economic Policy
BDI e.V.

+493020281591
+493020282591

Thomas Hüne
Senior Manager
Research, Industrial and Economic Policy
BDI e.V.

+493020281592
+493020282592