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Next German GDP figure to exceed expectations?

Thu, 16/01/2014 - 14:02

Rob Smith, Manager of the German Growth Trust at Barings, comments on the latest GDP figures from Germany…

When it comes to Germany, given the huge trade flows that influence the GDP numbers, it would not be advisable to extrapolate a trend from just a couple of quarters. 

All other things being equal, GDP will be negatively influenced by an increase in imports exceeding the movement in exports, which is what we have seen in the last two quarters. This has resulted in an overall negative drag effect for the year as a whole.

Given that Germany imports many raw materials before adding value and then exporting, it is just as likely that in the current quarter we will now see an increase in exports that exceeds the movement in imports and thus produces a GDP number ahead of expectations.

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