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Germany: Country Economic Forecast: 20 Aug 2013

10 Pages Oxford Economics August 20, 2013 SKU: OFE5101530

Germany: Country Economic Forecast: 20 Aug 2013

Germany led the recovery in the Eurozone in Q2 2013, as the economy expanded 0.7% on the quarter after stalling in Q1. The figure was slightly higher than the 0.6% rise we had expected. Growth in Q2 was driven by a rebound of investment and further expansion of private consumption, while net exports also contributed positively to growth. The manufacturing sector will benefit from a gradual pick-up in demand across the region in the coming quarters. In June, manufacturing orders from the Eurozone jumped 10% on the month (and were 3% higher in Q2 than in Q1), while industrial output increased by 2.4% on the month. Nevertheless, the recovery appears broad-based, as both the services and construction PMIs stayed above the 50-mark that separates expansion from contraction in July. We forecast annual GDP growth of 0.6% in 2013 and 1.7% in 2014. With output set to rise steadily, capacity utilisation rates will pick up, encouraging businesses to invest. We expect investment will expand by around 4% in 2014, after declining for two years in a row. Companies will also benefit from favourable lending conditions and a low level of debt. Meanwhile, household consumption is expected to increase 1% in 2013 and 1.2% in 2014, driven by real wage growth and a solid labour market. But inflation will remain higher than the Eurozone average, at just under 2% both this year and next.

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Germany: Country Economic Forecast: 20 Aug 2013

Oxford Economics
August 20, 2013

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