Germany: Economy running warm – BNPP
|The German economy continues to expand at a robust pace and research team at BNP Paribas expects GDP to grow by 1.8% during 2016.
Key Quotes
“Next year, mainly due to some uncertainty stemming from Brexit and higher energy prices, GDP growth is likely to slow to 1.5% y/y.”
“Residential construction will continue to support the economy. Demand for housing should be buoyed up by strong net migration, low interest rates and sound domestic fundamentals. Despite surging house prices, credit metrics continue to look solid.”
“Fiscal policy is set to stay accommodative. Consumers are also likely to benefit from a healthy labour market and some pickup in wage growth, including a rise in the minimum wage. These factors should limit the impact of higher inflation on spending.”
“For GDP growth in 2017, we are a little below consensus for the eurozone, but slightly above consensus for Germany. This implies a greater degree of German outperformance next year than the market expects.”
“Fiscal discipline could loosen more than we expect, supporting stronger growth. A more protectionist stance by the US or less dynamic growth in the economies of Germany’s main trading partners pose the biggest downside risks to our 2018 view.”
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