Growth Prospects in the G3

Germany's Economic Minister Guttenberg suggested that Europe's biggest economy might not have contracted in Q2. The market consensus is for a 0.3% quarterly contraction. The data is scheduled for release on Aug 13. The market is leaning in Guttenberg's direction but not until Q3. For the current quarter, the market consensus is for around a 0.2% quarter-over-quarter expansion.

Japan is more likely than Germany to post a positive Q2 GDP print. It will be released on Aug 16. The consensus is for about a 0.9% quarter-over-quarter advance. Such growth is fueled by industrial output, for inventory re-stocking purposes and exports.

Germany and Japan are heavily dependent on exports and domestic demand in both countries remains challenged. Moreover, the expansion expected in Japan should be understood as largely a "correction" to the Q1 outsized 3.8% quarter over quarter contraction.

For comparative purposes,the 1% annualized contraction the US reported on a preliminary basis is represents a contraction of about 0.25%. Note that Q3 forecasts have crept higher. The Bloomberg consensus was for a 0.8% increase and now it shows a 1% consensus. Recall that Greenspan talked before the weekend about a possible 2.5% pace and at least two former US investment banks have forecast 3% growth.
Growth Prospects in the G3 Growth Prospects in the G3 Reviewed by magonomics on August 06, 2009 Rating: 5
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