Germany: Gradual recovery with energy risks – Deutsche Bank
Deutsche Bank Research’s Germany Blog analyses August hard data, highlighting volatile one-offs in construction and manufacturing but more encouraging fundamentals.
Deutsche Bank Research's Germany Blog examines August hard data, revealing a gradual economic recovery with noticeable energy risks. Senior economists Marc Schattenberg, Felicitas Henze, and Eric Heymann emphasize strong order books, rising sentiment indicators, and fiscal stimulus bolstering the fourth quarter activity. They maintain a cautious stance, citing geopolitical uncertainties in fossil fuel prices and predicting a 1% full-year GDP growth for Germany.
Two crucial factors suggest further stabilization in the manufacturing sector. Firstly, order books across various industrial fields remain robust, even though recent incoming orders have softened. Secondly, substantial enhancements in manufacturing sentiment indicators—especially their forward-looking production expectations—indicate a forthcoming, albeit initially slow, recovery.
This improvement is partly fueled by fiscal stimulus gradually permeating the real economy, potentially sparking a Q4 economic surge. Nevertheless, a major downside risk persists for both manufacturing output and the overall economy, primarily due to geopolitical impacts on fossil fuel prices. The bank anticipates a 1% full-year GDP growth, aligning with market expectations.
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