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German GDP growth surprises sharply to the upside in third quarter

By Alexander Bueso

Date: Tuesday 14 Nov 2017

German GDP growth surprises sharply to the upside in third quarter

(ShareCast News) - The rate of growth in Germany's gross domestic product accelerated over the three months to September, on the back of stronger foreign demand and investment.
GDP growth picked-up from a 0.6% pace quarter-on-quarter for the three months to June to 0.8%, according to the Ministry of Finance.

Economists had anticipated just a 0.6% rate of increase.

The Ministry of Finance indicated that both net exports and gross fixed capital formation made positive contributions to the quarter-on-quarter rate of change in GDP.

Versus a year ago, GDP growth accelerated from 2.3% over the second quarter to 2.8% in the third.

Commenting on Tuesday's release, Barclays said: "While we expect global growth should continue to spill over into Germany, we believe that domestic demand will decelerate slightly, owing to the political uncertainty associated with the 2017 election and the Jamaica coalition negotiations."

Nevertheless, on the back of the above figures Barclays bumped up its forecast for real GDP growth in the last three months of 2017 from 0.5% to 0.6%.

Furthermore, annual growth was seen rising from 2.3% in 2017 to 2.4% in 2018 as Berlin "engages in significant fiscal stimulus following the election."

For his part, Claus Vistesen, chief euro area economist at Pantheon Macroeconomics, chipped in saying: "We're a bit surprised by the lift from net trade. We suspect the final revisions for trade in September will tell the true story, but our estimate going into this report was that net exports were flat.

"[...] Overall, these data tell a story of a German economy firing on all cylinders, not least because the Q1 data were revised up. German GDP rose a punchy 2.3% in the first three quarters of 2017, which means that the Q4 data will bring the economy stumblingly close to 3%."

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