Although details on the development of the individual GDP components will not be available for another two weeks, the announcement published by the German Federal Statistics Office today shows that growth in Germany is on a very broad footing. According to the Federal Statistics Office, a major growth contribution in the second quarter came from private and public-sector consumption. The fact that investment activity appears to have picked up considerably is also encouraging and is likely due, at least in part, to weather-related catch-up effects as a result of the long, cold winter. This puts an end, at least for the time being, to the investment slump that has been with us since the closing quarter of 2011. The weak investment activity is the problem child of Germany's domestic economy: real investment in machinery and equipment was – based on the latest available figures – down by almost 14% on the level seen in mid-2007.
We expect the economic recovery to continue in the second half of 2013. This is supported, among other things, by the most recent data from the industrial sector: in June, industrial production was no less than 4% higher than the average level for the first quarter. Private consumption – bolstered by a still favorable
employment and income development – is likely to continue to supply clear positive impetus. We also predict that exports will provide increasing stimulus, first because the weak state of the Chinese economy is likely to be temporary, and second thanks to increasing signs of an economic recovery in the euro area. We do, however, expect investment activity to recover only gradually given that the business expectations of the corporate sector remain fairly subdued on the whole. All in all, we are sticking to our forecast that the German economy will achieve average growth of almost 1% this year.