German Q1 GDP growth expected to remain robust

In Q1, German GDP is expected to rise by 0.6% qoq, down from 0.7% in Q4 14, on the back of robust domestic demand. 

Private consumption should have seen another strong quarter while also construction investment is expected to have remained strong. 

Net exports are expected to deliver a slightly negative contribution to growth. While data for March have been much weaker than expected, especially retail sales and industrial production, robust economic in activity at the start of the quarter looks sufficient to deliver another good quarter for the German economy. 

The weakening momentum into Q2 are somewhat worrying but strong real income growth is expected to carry consumption also for the rest of the year, while industry should be able to pick up some speed as growth in the US and trade rebounds following the weather related weakness in Q1. 

"We still expect GDP growth of around 2% this year, before rising inflation starts taking a heavier toll on real disposable income and consumption next year", said Societe Generale in a report on Monday.