Raised expectations for German economic growth

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What's going on?

Germany’s GDP this year is expected to grow at a much faster rate than previously thought, according to a survey of the country’s leading economic institutes.   The expectation is now for GDP growth of 2.1% in 2015, which is a large upward revision versus the institutes’ previous expectation of 1.2%. It is also significantly higher than the 1.5% growth rate currently expected by the German government.

What does this mean?

The recent substantial decline in the value of the Euro is aiding German exporters, while low oil prices and increasing wages are benefitting German consumers. As a result, the German economy is improving: companies are producing more goods and services, workers are making more money and the average consumer is spending more.

Why should I care?

If expectations for German economic growth continue to move higher, it will likely be a positive for German listed stocks. If the Euro were to move lower, particularly versus the USD, exporters would benefit even more. Even without further weakening of the Euro, the feed-through effects of a better economy would likely benefit Germany-orientated companies, especially companies that sell consumer goods to Germans.
Originally posted as part of the Finimize daily email.

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