Focus for 13 JAN 2010: German 2009 Annual GDP

[Imperial Forex]

Focus for 13 JAN 2010: German 2009 Annual GDP

German GDP to contract by 4.8% in 2009 compared to 2008
Range forecast of –4.2% to –5.0%
Quarter-on-quarter GDP rose by 0.4% and 0.7% in Q2 and Q3

Germany will release the annual GDP growth figure for 2009 on Wednesday 13th January 2009 with economists forecasting a contraction of 4.8% compared to the expansion of 1.3% in 2008. The GDP growth from 2006 (3.2%) to 2008 was slowing as global markets entered the recession and the fallout from the sharp fall in investment and credit lending is reflected in the 2009 figure. Analysts were slightly more optimistic in the latest survey, after a Reuters poll carried out in October that showed they predicted the economy would contract 5% (which fell in line with German Chancellor Angela Merkel’s own forecast).

Domestic demand in Germany remains weak as evidenced by last week’s release of trade data which showed an unexpected drop in imports, however, stabilizing labour market conditions and the strong rise in exports should continue to consolidate Germany’s position as one of the leading global exporters, even though it may have been overtaken in China in 2009.

The latest quarter-on quarter GDP data showed marginally positive growth rates in the second and third quarters of 0.4% and 0.7% and in view of the economic recovery seen in Germany’s main trading partners, German GDP growth is forecast to gather some pace in mid-2010 with a forecast ranging from 1.5% to 1.8% for the 2010 annual GDP, however, government officials tend to be more cautious about the prospects for a strong rebound in domestic consumption and German GDP growth may lag behind the U.S.

On the currency front, euro may fall briefly if the German annual GDP comes in weaker than -5.0% but focus will turn to next week’s ZEW economic survey (January 19th) for more clues on the medium-term outlook for the German economy. A figure near the upper end of the survey (-4.2% to –4.5%) will give a boost to the single currency but this is also expected to be short-lived unless other near-term market factors come into play (such as the movements in European stock markets).


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