• German economic growth accelerates sequentially in Q2 2018

    Source: FxWire Pro - Commentary / 14 Aug 2018 10:38:04   America/New_York

    German economic growth accelerated slightly more rapid than anticipated in the second quarter. On a seasonally adjusted basis, the GDP grew 0.5 percent in the quarter, as compared with the first quarter growth of 0.4 percent. The Federal Statistical Office, stated that the rise was mainly because of private and public consumption and investments. Surprisingly, the statisticians revised the growth rates of the last three quarters of last year downwards by 0.1 percentage points each.

    This has lowered the starting point for the 2018 forecasts, so that despite the slightly stronger than expected H1 2018 growth, the forecast for 2018 as a whole is at 1.8 percent, noted Commerzbank in a research report. As the economic growth rose 2.2 percent in 2017, it has still slowed in spite of the revisions. The softer growth is mainly because of exports, which is why it is more pronounced in export-oriented manufacturing. Incoming orders continued to drop in the second quarter.

    “This suggests that GDP will grow less in the third quarter than in the average for 2017; we expect Q3 2018 GDP to rise by 0.4 percent quarter-on-quarter”, stated Commerzbank.

    Given the Lira crisis, the Turkish economy is likely to end up in recession. However, as the issues are mainly home-made, Turkey is unlikely to infect other nations. The risk is also manageable for the German economy.

    In 2017, only 1.7 percent of German exports of goods went to Turkey, which is only ranked 16th among Germany’s export markets. German exports growth to Turkey had decelerated in recent years anyway. American car tariffs, which have not yet been finally averted, represent a significantly higher risk for the German economy than the Turkish crisis.

    At 14:00 GMT the FxWirePro's Hourly Strength Index of Euro was highly bearish at -128.399, while the FxWirePro's Hourly Strength Index of US Dollar was slightly bullish at 63.3136. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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