Country Economic Forecasts > Germany

After a lacklustre second half of 2015, there are signs that the German recovery may have regained a bit of steam in the early stages of this year. We maintain our view that GDP will expand by 1.7% this year, well above the economy's trend rate of growth.Although the business surveys have weakened since Q4, the 3.3% monthly jump in industrial production in January suggests that the industrial sector has staged a rebound in early 2016 and will expand at a solid pace in Q1. Meanwhile, retail sales and new car registrations data indicate that the consumer recovery shows no signs of slowing. While it is too early to draw firm conclusions about the pace of GDP growth in Q1 just yet, a quarterly rise of 1% is quite possible. That said, the stronger the pace of growth in Q1, the more likely that there will be some 'payback' in Q2.Overall, while our baseline view remains that the economy will expand by 1.7% this year, we have downgraded our 2017 forecast to 1.9%.