IMF Revises Germany Growth Downwards Due to Uncertainty

Germany—2013 Article IV Consultation: Concluding Statement of the IMF Mission

Amid strong domestic fundamentals, a recovery in activity in Germany is expected in the second half of 2013. A more robust rebound is being held back by continued weakness in business investment, mainly related to uncertainty surrounding prospects and policies for the euro area, despite the progress made so far. The slight loosening of the fiscal stance envisaged this year is appropriate, and fiscal over-performance should be avoided. Domestic financial sector reforms should be undertaken with a view to ensuring both full harmonization with European initiatives and clarity on the emerging financial landscape. Structural reforms to raise the German economy’s growth potential remain an important priority.
Uncertainty is holding back a pick-up in growth

1. Growth in 2013 is expected to be weak. Domestic fundamentals continue to remain strong and past reforms have paid off as seen in low unemployment. While consumption has been robust, business investment has been declining since late 2011. The uncertainty, mainly surrounding prospects for the euro area and the ongoing recession in the region, have led to declining German exports to the region as well as a sharp pull back in business investment. Amid still elevated euro area uncertainty, we now project GDP in Germany to expand at around 0.3 percent in 2013. A gradual pick-up in activity projected towards the end of the year is conditional on a further and tangible reduction in this uncertainty and a materialization of the expected gradual recovery in the rest of the euro area.

For the full consultation visit the IMF site

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza