The German economy has regained a foothold and, with seasonally adjusted GDP growth of +0.4% q/q, enjoyed a strong start to 2019. Recent concerns about an extended period of economic weakness have thus turned out to be exaggerated. As a reminder, as recent as Q4 2018 the German economy narrowly avoided falling into recession, with a perfect storm of weak world trade, car sector crisis and elevated political uncertainty brewing over the German industry. Q1 GDP data, however, give no reason to throw all economic concerns overboard. After all in view of the difficult global environment, a v-shaped recovery in industry is not in the cards and domestic demand is likely to eventually slow without tailwind from foreign trade. All in all, the German economy will remain on a growth course, but the pace of expansion observed in the first quarter of 2019 is unlikely to be maintained in the coming quarters. We are sticking to our growth forecast of +1.0% for this year as a whole.
