The German economy should continue to grow
in the third quarter in line with the robust
underlying cyclical upthrust.
Despite the low
level of new orders received in the second
quarter, the mood in German industry has im-
proved distinctly. Notwithstanding the intense
public discussion about the economic implica-
tions of the UK’s announced departure from
the EU, German firms have so far only slightly
moderated their positive expectations.
This supports the assessment that the economic
consequences of the Brexit vote for Germany
are likely to be very limited in scope, at least in
the short term. German frms’ positive expect-
ations regarding foreign sales suggest that
exports, too, will grow solidly in the third quar-
Overall, production by industrial firms
should once again make a stronger contribu-
tion to aggregate growth in the third quarter.
Given that capacity utilisation is already above
its average level, this should also mean more
investment in machinery and equipment. Con-
struction investment should also provide a
greater impetus in the third quarter after the
effects of the weather-related second-quarter
rebound in building activity have petered out.
In addition, private consumption should once
more be a signifcant driver of domestic eco-
nomic growth after faltering in the first quarter.
Both employees’ income prospects and the
labour market situation remain favourable, and
the preceding rise in crude oil prices has