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Economy in Brief

German GDP Rebound Still Not Supported by the Consumer
by Robert Brusca August 23, 2007

Germany is a much more export oriented economy than is the United States. With the formation of the EMU, Germany was helped by having a large proportion of its trade no longer subject to foreign exchange fluctuations. Goods sold outside Germany are still exports, but if they are sold to EMU members the currency of the transaction does not change.

German private consumption is only 55% of German GDP. Compared to the US where personal consumption is over 70% of GDP.Also German exports are 49% of GDP whereas in the US exports of goods and service are only about 11% of GDP. The German economy has a structure very different from the US. Still at 55% of GDP the German economy needs to get the consumer involved to have its expansion last. Germany’s economy is being carried by its export strength compared to weaker imports and strong business capital formation. But it will need more for the expansion to endure. Germany like many other EMU countries continues to show that order demand outside the country is much stronger than within. Overall orders remain strong for Germany and France. For the time being the expansion still seems to be in place. But it must broaden. The risk cited recently in the Zew survey is that confidence may have been hurt by financial turmoil. This remains something to be on the look-out for in Germany as well as throughout the Euro area.

German GDP
  GDP Private Consumption Public Consumption Total Capital Formation Housing Exports Imports Domestic Demand
% change Q/Q; X-M is Q/Q change in billions of chained 2000 euros
Q2-07 1.0% 2.5% -0.7% 10.3% -18.0% 3.6% -3.5% -2.2%
Q1-07 2.2% -7.0% 6.9% 15.7% 5.8% -1.2% 8.7% 6.8%
Q4-06 4.0% 3.4% 0.0% 10.8% 6.2% 23.0% 5.4% -3.6%
Q3-06 3.0% 1.4% 2.1% -2.4% 8.0% 13.9% 14.9% 2.7%
% change Yr/Yr; X-M is Yr/Yr change in Gap in billions of chained 2000 euros
Q2-07 2.5% 0.0% 2.0% 8.4% -0.1% 9.4% 6.2% 0.8%
Q1-07 3.6% -0.5% 2.1% 11.7% 12.7% 10.4% 7.9% 2.3%
Q4-06 3.9% 2.2% 0.9% 7.1% 6.6% 16.1% 9.7% 0.8%
Q3-06 3.2% 0.6% 0.8% 9.4% 7.2% 11.6% 11.0% 2.6%
5-Yrs 1.3% 0.2% 0.4% 5.8% -0.7% 7.8% 6.9% 0.7%
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