German’s weak industrial sector likely to weigh on GDP in Q1 16

Germany's fourth quarter flash GDP print was at 0.3% q/q, in line with markets expectations, suggesting a modest growth of the German economy. The GDP figure for the year 2015 was revised down to 1.4%.

Public consumption has shown a strong growth and could surpass private consumption in the final quarter of 2015. Private consumption was supported by a strong labor market with rise in real wages and an increase in the number of employed persons in Q4.

Moreover, investment was also robust supported by substantial increase in investment in construction activities. However, net trade weighed on the GDP as exports and imports declined drastically. Growing concerns about future global demand for German exports have negatively affected the factory orders, industrial production and nominal exports.

"The weakness in the industrial sector which lacked momentum with growth remaining broadly flat in 2015 is likely to carry over to Q1 16. Considering the dependence of the German economy on the industrial sector and on exports, we see downward risk to our GDP forecast for 2016" says Barclays in a research note