Germany Should Support Eurozone in Q2 2013

Germany, the euro zone’s largest economy (27% of Eurozone GDP), is on track for a strong recovery in Q2 2013 thanks to domestic investment and also exports, the Bundesbank said on Tuesday in its monthly report (May).

The German economy expanded 0.1% in Q1 2013, less than the 0.3% forecasted by consensus, as the recession in the euro area extended to a record sixth quarter and the weather was very cold. Nevertheless Germany’s economic recovery will gather pace in the current quarter:

“Economic activity is expected to improve markedly in the second quarter of 2013″

Firsty, residential investment should improve as there is likely to be:

“catch-up effects in response to the weather-related downturn in construction activity during last winter”

Moreover, with falling borrowing rates and euro in Q2, non-residential investment and exports will be sustained in Q2 2013:

“Debt financing conditions are exceptionally favorable, and there are no signs that large firms or small and medium- sized enterprises in Germany are finding it noticeably more difficult to access credit”… “The noticeable increase in industrial orders after a weak start to the year gives hope that with exports and equipment investments, demand factors – on whose stimulus the German economy can generally rely the most – will recover”

As a consequence, Germany should support Eurozone in Q2 2013 and that’s why we could expect at least a growth stabilization for the euro area. It could be the first sign of a gradual recovery. Let we se…