German growth accelerated in the second quarter of this year, but by less than expected, with foreign trade acting as a support and investment braking Europe’s largest economy.
German GDP grew 0.4 percent in the quarter between April and June after expanding by 0.3 percent in the first three months of this year. The consensus forecast for the second quarter in a Reuters poll was for 0.5 percent growth.
“Growth is not rapid at the moment, but it has a solid basis,” Holger Sandte at Nordea said.
“The biggest weakness is in companies’ investments, and that is likely to remain the case as a good outlook for sales is apparently lacking,” Sandte said.
The mood among analysts and investors in Germany worsened this month due to concerns about the effect of an unstable global economic backdrop on the country’s export-dependent economy.
Some economists took confidence, however, from yesterday’s GDP figures showing that neither a slowdown in China nor the crisis in Greece slowed the German economy in the second quarter.
The solid German expansion contrasted with a stagnation in the French economy in the second quarter.
“Neither the Chinese growth slowdown nor the events in Greece threw German companies off track,” Andreas Rees at UniCredit said.
“Furthermore, overall domestic demand remained solid despite the weather-related decline in the construction sector,” Rees said.
The Statistics Office said exports rose much more strongly than imports in the second quarter, supported by the weak euro. However, it said there was a marked drop in inventories and weakness in investment.
Unadjusted data showed the economy expanded by 1.6 percent on the year in the second quarter, surpassing the Reuters consensus forecast for 1.5 percent growth.
The uncertain global outlook is holding back German firms.
Around half of Germany’s 30 blue-chip companies reported consensus-beating financial results for the April-June period. More than two thirds nonetheless stuck with their guidance for the year as a whole as geopolitical and economic uncertainties remain for the second half of the year.
Business confidence nonetheless improved last month after two monthly drops as an agreement between Greece and its creditors for talks on a third bailout lifted the mood at firms.
In positive news for the economic outlook, figures released last week showed industrial orders recorded their biggest gain since early 2011 in the April-June period thanks mainly to strong foreign demand.
Some German industrial companies have made upbeat earnings announcements. German auto parts and tyre maker Continental this month raised its full-year profit outlook after quarterly earnings jumped more than expected on a strengthening European car market.
Much of the concern about the outlook concerns China, which has seen a run of weak economic data.
“There is no denying in that the Chinese slowdown already weighed on German companies’ business. It also likely that the downward pressure will intensify in the second half of this year,” Rees said.
DOLLAR CHALLENGE: BRICS countries’ growing share of global GDP threatens the US dollar’s dominance, which some member states seek to displace for world trade US president-elect Donald Trump on Saturday threatened 100 percent tariffs against a bloc of nine nations if they act to undermine the US dollar. His threat was directed at countries in the so-called BRICS alliance, which consists of Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran and the United Arab Emirates. Turkey, Azerbaijan and Malaysia have applied to become members and several other countries have expressed interest in joining. While the US dollar is by far the most-used currency in global business and has survived past challenges to its preeminence, members of the alliance and other developing nations say they are fed
LIMITED MEASURES: The proposed restrictions on Chinese chip exports are weaker than previously considered, following lobbying by major US firms, sources said US President Joe Biden’s administration is weighing additional curbs on sales of semiconductor equipment and artificial intelligence (AI) memory chips to China that would escalate the US crackdown on Beijing’s tech ambitions, but stop short of some stricter measures previously considered, said sources familiar with the matter. The restrictions could be unveiled as soon as next week, said the sources, who emphasized that the timing and contours of the rules have changed several times, and that nothing is final until they are published. The measures follow months of deliberations by US officials, negotiations with allies in Japan and the Netherlands, and
Qualcomm Inc’s interest in pursuing an acquisition of Intel Corp has cooled, people familiar with the matter said, upending what would have likely been one of the largest technology deals of all time. The complexities associated with acquiring all of Intel has made a deal less attractive to Qualcomm, said some of the people, asking not to be identified discussing confidential matters. It is always possible Qualcomm looks at pieces of Intel instead or rekindles its interest later, they added. Representatives for Qualcomm and Intel declined to comment. Qualcomm made a preliminary approach to Intel on a possible takeover, Bloomberg News and other media
Foxconn Technology Group (富士康科技集團) yesterday said it expects any impact of new tariffs from US president-elect Donald Trump to hit the company less than its rivals, citing its global manufacturing footprint. Young Liu (劉揚偉), chairman of the contract manufacturer and key Apple Inc supplier, told reporters after a forum in Taipei that it saw the primary impact of any fresh tariffs falling on its clients because its business model is based on contract manufacturing. “Clients may decide to shift production locations, but looking at Foxconn’s global footprint, we are ahead. As a result, the impact on us is likely smaller compared to
RSS