2016.05.2711:40:00UTC+00German Economy Unlikely to Sustain Strong Growth Into Second Quarter

German manufacturing made a strong start to the New Year and in the first quarter posted a growth rate of 1.8% q/q. The overall economy also expanded much more quickly in Q1 than in the preceding quarters. At the start of the year, GDP was 0.7% up on the quarter.

But this strong growth is unlikely to be sustained, as it was mainly driven by construction activities, which profited from the mild weather. A follow through to the first quarter is unlikely. Leading indicators such as order intake suggest that the German economy continues expanding, but not at the pace seen in Q1.

"Due to the strong plus in the Q1 we have revised our growth forecasts for this year from 1.3% to 1.5%. For 2017 we expect a growth rate of 1.3%.” said Dr Jörg Krämer, Chief Economist at Commerzbank