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After a 0.5 per cent (q-o-q, seasonally and working-day adjusted) decline in the fourth quarter of 2012, real GDP stabilised in the first quarter of 2013 and rose markedly in the second quarter (0.7 per cent). Domestic demand, in particular private consumption and changes in inventories, made the main contributions to growth in the first two quarters of 2013, while the contribution of gross fixed capital formation was negative. Going forward, indicators point to a continued expansion at a more moderate pace in the coming quarters, with weather-related catching-up effects in the second quarter of 2013 likely to have overstated the underlying growth dynamics.
Recent surveys reflect overall positive sentiment of households and firms, with notably the latter expecting a continued increase in production for the coming months. Overall, real GDP is projected to grow by 0.5 per cent in 2013 and by 1.7 per cent in 2014. In 2015, economic activity is expected to see only a further slight acceleration. Together with a higher number of working days, this should result in an annual growth rate of 1.9 per cent.
Ending six quarters of contraction amid crisis-related uncertainty, the second quarter of 2013 saw a small increase in machinery and equipment investment. Dissipating uncertainty, slowly rising capacity utilisation and favourable financing conditions are set to underpin a further gradual recovery over the forecast horizon. The upswing could be less dynamic than in previous upturns, reflecting a lasting downward shift in sales expectations given adjustment processes in Europe and slower growth in emerging markets.
Export growth is set to accelerate slightly less than projected in spring. Export expectations remain at a quite optimistic level but foreign industrial orders have not increased significantly lately. Import growth is set to increase more strongly than export growth as equipment investments pick up. This is expected to contribute to a stabilisation of the current-account surplus this year and to some narrowing by 2015.
The unemployment rate is at a record low, yet a further gradual rise in employment is expected. After a temporary deceleration in 2013, growth in wages and compensation per employee is set to reaccelerate, so unit labour cost growth would remain above the euro-area average. Consumer price growth is forecast to slow to 1.7 per cent in 2013 and 2014 and further to 1.6 per cent in 2015.