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14 Aug 2015
Opposite views from German and French GDPs – ING Bank
FXStreet (Edinburgh) - Analysts at ING Bank Carsten Brzeski and Julien Manceaux have assessed the recent flash GDP figures in both Germany and France during the second quarter.
Key Quotes on Germany…
“Neither Greece nor China were able to stop the German economy. According to the just released first estimate of the German statistical agency, GDP grew by 0.4% QoQ in the second quarter, from 0.3% QoQ in 1Q. Compared with the second quarter of 2014, German GDP increased by 1.6%. GDP components will only be released at the end of the month but available monthly data and the statistical agency’s press release indicate that growth was driven by exports and domestic consumption. Investment was a drag on growth”.
“All in all, the first estimate of German Q2 growth just confirmed that the Eurozone’s economic powerhouse is cruising along nicely, despite several external turbulences. While the Eurozone economy seems to see some signs of rebalancing with the stagnation in France and strong growth numbers from Spain and Greece, Germany remains an almost boring beacon of reliability”.
Key Quotes on France…
“In July, business confidence remained stable just below its long term average, at 98.0. It has been hovering around that level since September 2013… We already know that industrial production contracted in the second quarter, with manufacturing and construction activity decreasing markedly. This left little space for a positive surprise around GDP growth figures this morning… Today’s 0.0% figure is therefore a rather bad surprise, dampening hopes of significantly above 1.0% GDP growth this year”.
“Looking ahead, given today’s figure and the fact that July’s manufacturing PMI remained only a notch above the 50.0 threshold (in expansion territory, at 51.5), a strong acceleration is not in sight yet. It looks as even if the general outlook has improved (a weaker euro and lower energy prices), it has not yet materialized in stronger domestic demand… We expect the labour market to gradually stabilize and reinforce confidence in coming months. This means that the recovery is likely to continue to unfold in coming months, albeit at a slower pace than expected. If better labour market figures do not materialize soon, the risk is to see the French economy recovering only marginally in 2015 with a GDP growth closer to 1% than the 1.5% hoped for only some months ago”.
Key Quotes on Germany…
“Neither Greece nor China were able to stop the German economy. According to the just released first estimate of the German statistical agency, GDP grew by 0.4% QoQ in the second quarter, from 0.3% QoQ in 1Q. Compared with the second quarter of 2014, German GDP increased by 1.6%. GDP components will only be released at the end of the month but available monthly data and the statistical agency’s press release indicate that growth was driven by exports and domestic consumption. Investment was a drag on growth”.
“All in all, the first estimate of German Q2 growth just confirmed that the Eurozone’s economic powerhouse is cruising along nicely, despite several external turbulences. While the Eurozone economy seems to see some signs of rebalancing with the stagnation in France and strong growth numbers from Spain and Greece, Germany remains an almost boring beacon of reliability”.
Key Quotes on France…
“In July, business confidence remained stable just below its long term average, at 98.0. It has been hovering around that level since September 2013… We already know that industrial production contracted in the second quarter, with manufacturing and construction activity decreasing markedly. This left little space for a positive surprise around GDP growth figures this morning… Today’s 0.0% figure is therefore a rather bad surprise, dampening hopes of significantly above 1.0% GDP growth this year”.
“Looking ahead, given today’s figure and the fact that July’s manufacturing PMI remained only a notch above the 50.0 threshold (in expansion territory, at 51.5), a strong acceleration is not in sight yet. It looks as even if the general outlook has improved (a weaker euro and lower energy prices), it has not yet materialized in stronger domestic demand… We expect the labour market to gradually stabilize and reinforce confidence in coming months. This means that the recovery is likely to continue to unfold in coming months, albeit at a slower pace than expected. If better labour market figures do not materialize soon, the risk is to see the French economy recovering only marginally in 2015 with a GDP growth closer to 1% than the 1.5% hoped for only some months ago”.