The outlook for the third quarter is fairly divided. While prospects for the construction sector are still good and private consumption is likely to continue to provide a boost despite the renewed pickup in fuel prices, exports are more likely to stagnate and equipment investment will probably dip slightly. All told, gross domestic product will probably record further marginal growth in the third quarter, but stagnation cannot be ruled out either.
Much depends on how robust the labor market remains. Employment has continued to rise of late – if not as strongly as in the winter months 2011/2012. Ongoing job creation is an important prerequisite for further gains in real private household earnings.
Overall, however, prospects are still good that the German economy will weather the situation and not slip into a downturn. The decline in the external value of the euro boosts the price competitiveness of German exporters considerably and is likely to continue to increasingly buoy German exports despite weak demand in some European countries. We still expect to see growth of 1.0% in 2012, although the risk of a smaller increase has risen.