According to our analysis of the leading indicator function, the assessment of the current situation in industry has a lead of only one month over production, but business expectations a lead of at least three months. This suggests that, although industrial production is weak in the fall of this year, there is a chance that business activity will stabilize soon.
This leaves our assessment of the German economy fundamentally unchanged: gross domestic product is likely to have risen by around 0.25% quarter-onquarter in the third quarter on the back of fairly healthy production numbers in July and August. In the fourth quarter, however, GDP is likely to see minimal growth at best or indeed stagnate. Growth prospects over the course of 2013 are more auspicious again – always assuming that the European debt crisis does not flare up anew.
The weakness of the economy in the autumn of ths year is not attributable solely to falling exports to the eurozone. On the domestic front corporate investment is currently headed firmly south. With the earnings picture still decent and financing conditions very favorable, companies are likely to start investing more again soon if the debt crisis continues to subside. As the prospects for a further rise in consumer demand also remain favorable, the German domestic economy is likely to gradually regain momentum in the coming quarters. We are penciling in GDP growth of 1.5% in 2013 after 0.8% this year.