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Solid start to the year: German GDP expected to rise by 0.4 percent in the first quarter

02.05.2019

Economic output in Germany is likely to have increased by 0.4 percent in the first quarter of the current year. This would have made the economic momentum stronger than many had expected. This is the conclusion drawn from the preliminary flash estimate published by Eurostat for economic output in the euro zone in the first quarter of 2019, which is also based on previously unpublished data on German GDP.

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According to a calculation by researchers at the Forecasting Center at the Kiel Institute for the World Economy (IfW Kiel), gross domestic product (GDP) in Germany is likely to have increased by 0.4 percent in the first quarter of 2019 compared with the previous quarter. This is suggested by the flash estimate presented on Wednesday by Eurostat, the European statistical office, according to which economic output in the euro zone as a whole rose by 0.4 percent. The estimate is based on data from 17 member states, which cover 93 percent of the economic output of the currency area. This includes previously unpublished data on German GDP. The official flash estimate for the German figures will be published by the Federal Statistical Office in two weeks’ time (15 May).

Conclusions from estimates for the euro zone

According to the IfW researchers, the published price- and seasonally adjusted expansion rates for France (+0.3 percent), Italy (+0.2 percent), Spain (+0.7 percent), Belgium (+0.2 percent) and Austria (+0.3 percent), which together account for more than half of the economic output of the euro zone, allow quite reliable conclusions to be drawn about the development of German GDP. For the nine countries besides Germany for which no flash estimates are yet available, short-term forecast models showed growth of just under 0.5 percent. For Germany, this translates into seasonally and calendar-adjusted GDP growth of 0.4 percent compared with the previous quarter and 0.7 percent compared with the prior-year quarter.

Significant differences from sector to sector

“Following stagnation in the second half of 2018, economic momentum in Germany picked up again in the first quarter. Even though the negative special factors (WLTP changeover, low water), which mainly affected the industrial sectors, are gradually coming to an end, the start of the year continues to be marked by a mixed economic picture. Declining capacity utilization in the manufacturing sector contrasts with a lively services sector and a construction industry that continues to boom. Last but not least, the fiscal relief and the continued very robust development of the labor market should have given the consumer-oriented sectors in particular a boost at the start of the year,” said Stefan Kooths, Head of Forecasting at the Kiel Institute.

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