Having recorded quarter-on-quarter growth of only 0.4% in the fourth quarter of 2010 – due to the adverse weather – the German economy looks set to clock up substantially higher growth in the first quarter of 2011. We estimate that the German economy will rise by approaching 1% on the preceding quarter and by almost 4.5% on the corresponding quarter a year earlier. This would be the highest annual growth rate since the first quarter of 2000.
Almost all sectors are contributing to humming business activity. The business climate in the services sector is even more upbeat than in industry. In the construction sector sentiment continues to improve strongly. With growing capacity constraints in industry, investment activity is likely to pick up sharply. Machinery and equipment investment is likely to increase by close on 10% in 2011.