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No Improvement In German GDP

James Boston
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No Improvement In German GDP

Germany has finalised it’s second quarter growth figures in a release this morning, there has been no material upgrade to the lacklustre preliminaries published last month. The quarter on quarter number continues to show a contraction of -0.2% for the quarter, this represents a fall from the 0.7% expansion in Q1 of this year. Annualized GDP for the Eurozone’s largest economy has been confirmed at 0.8% to the end of Q2, this is a fall from the 2.5% experienced to the end of Q1. Additionally, the publication this morning of the annualized week day adjusted number of 1.2% further confirms the declining growth situation in Germany particularly when compared to the 2.5% level experienced for the first quarter of this year.

Official GDP forecasts for German growth now stand at 1.9% in 2014 and 2.0% in 2015 according to the latest Bundesbank projections, based on recent data however these numbers are at risk of a downgrade in the coming weeks. The equivalent Eurozone growth predictions for 2014 and 2015 stand at 1.0% and 1.7% respectively, these too look to be on the high side given the slowing rate of expansion in the larger bloc economies. The European Central Bank (ECB) is meeting this Thursday and yet again markets are not anticipating any definitive action from the Bank. This is despite the fact that ECB president, Mario Draghi, made comments at the recent Jackson Hole symposium to the effect that that the Bank remains ‘ready to adjust the policy stance further’.

Draghi’s further comments that governments should be considering the use of fiscal stimulus to attempt to revive the Eurozone economies caused some concern. In general because it is seen as an admission by the ECB that it is running out of monetary options but Germany in particular expressed concern that the Bank was condoning an easing of the austerity principal that it has backed since the start of this crises.

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