GERMANY / EURO AREA GROWTH
Downside risks to growth due to investment and exports
GDP growth in Germany and the euro area likely to slow in a synchronised way, as fiscal tightening is replaced by monetary tightening including a stronger euro.
The shift of income growth from profits to labour implies a strengthening of consumption growth relative to exports and investment in Germany.
The result will be a convergence in demand drivers between Germany and the euro area next year.
The main risk to household consumption may come from politics, if the drive towards minimum wages puts low paid jobs at risk – but this is only likely to impact in 2009.
In terms of the composition of investment spending in Germany we see downside risks to equipment spending and upside risks to construction.
Asset conclusions: slower but steady growth bodes well for stocks in general relative to bonds and for consumption stocks in particular. The erro is likely to decline from its peak.
© Graham Bishop
Documents associated with this article
|
|
EZA813.pdf
|
Key
Hover over the blue highlighted
text to view the acronym meaning
Hover
over these icons for more information
Comments:
No Comments for this Article