German Economy Confirmed to Have Contracted on Declining Exports
THE TAKEAWAY: Final estimate of German GDP for Q4 confirms a 0.6% decline -> Exports provided for much of the economic contraction -> Euro trading steady
The German economy was confirmed to have contracted for only the second time in three years according to the final Q4 GDP estimate by the Federal Statistical Office. GDP declined 0.6% over the fourth quarter (seasonally adjusted), matching the earlier estimate, and the GDP was 0.4% higher than Q4 of 2011 (working day adjusted).
The economic contraction was partially due to the 2.0% decline in exports over the fourth quarter. Exports provided 50% of the German GDP in 2011, therefore the decline in exports heavily burdens the Euro-zone’s biggest economy. Additionally, government spending increased by 0.4% in the fourth quarter, while private consumption increased 0.1%. Domestic demand rose 0.2% over the final quarter, while imports dropped 0.6%.
The Bundesbank recently predicted that the German economy will return to growth in the current quarter on improved industrial production, and the central bank further said that a gradual recovery is likely for the rest of the year. The improved economic prediction followed the Bundesbank’s December forecast, which saw 0.4% growth in 2013.
Signs of German economic growth are Euro positive. However, today’s release only confirmed an earlier estimate and did not have a significant impact on the Euro. EUR/USD is trading slightly above 1.3200 in Forex markets, and the pair may see resistance by a broken support around 1.3284. Support might be provided at 1.3184, by the first support given by the monthly pivot indicator.
EURUSD Daily: February 22, 2013
Chart created by Benjamin Spier using Marketscope 2.0
-- Written by Benjamin Spier, DailyFX Research. Feedback can be sent to firstname.lastname@example.org .
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