Bundesbank sees German Q1 GDP growth slower than Q4 2006
FRANKFURT (Thomson Financial) - German GDP growth in the first quarter is expected to have slowed compared with the fourth quarter last year, as increases in value-added taxes curbed private consumer spending, the Bundesbank said in its monthly report.
“Growth in real GDP, in seasonal and calendar-adjusted terms, could have narrowed in line with expectations compared with the strong growth seen towards the end of 2006,” it said.
The Federal Statistics Office is due to release preliminary first quarter GDP figures on May 15.
In the fourth quarter last year, German GDP grew 0.9 pct in seasonally, price and calendar-adjusted terms compared with the third quarter.
The Bundesbank said latest indicators pointed to the continuation of economic recovery in the first quarter, with the major positive impulse coming from the industrial sector.
But with VAT increasing to 19 pct at the start of the year from 16 pct, private consumer spending declined — taking a toll particularly in the sales of retail and passenger car markets — “significantly” dampening GDP growth as a result, the central bank said.
It said a trend toward rising exports has been more than mitigaged by a stronger than expected rise in imports, resulting in a negative impact on GDP growth.
But investments, both for producer goods and construction, remained “lively”, while companies are stocking up their inventories, contributing further to growth.
marilyn.gerlach@thomson.com
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