Upswing moves up a gear

In the first quarter of 2017 the German economy recorded strong seasonally and working-day adjusted growth of 0.6%, appreciably more buoyant than in the preceding two quarters. The broad-based nature of the upswing is illustrated by the substantial increases recorded by both the domestic economy and exports. The pickup in exports points to an improvement in the world economy. In this context it also significant that the eurozone economy has firmed up further.

The strong increases in investment in the first quarter are a positive signal, especially as they also applied to equipment investment. It is to be hoped that this is not just a flash in the pan. After all, equipment investment had previously fallen three quarters in a row.

However, the weak performance of labor productivity remains puzzling. In the first quarter of 2017 the number of people in work was 1.5% up on a year earlier, but the increase in real gross domestic product was a mere 1.9%, signifying an increase in labor productivity per employee of only 0.4%. Viewed positively, however, this can be seen as pointing to very job-intensive economic growth.

The 0.6% growth seen in the first quarter is fully in line with our expectations. We are therefore sticking with our forecast of a 1.7% increase in real gross domestic product on average in 2017.


Rolf Schneider

Allianz SE
Phone: +49 69 24431 5790

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