DATAWATCH Germany seen staying in recession in Q2 after industrial output data 11.06.2003 14:26 Headlines
FRANKFURT (AFX) - A sharper-than-expected April fall in industrial output
suggests Germany will remain in recession in the second quarter, economists
said.
German output fell a seasonally adjusted 1.0 pct in April from March,
compared with expectations of a decline of just 0.3 pct.
Production is therefore likely to show a setback in the second quarter as a
a whole, keeping the German economy in recession, economists said.
"It means the outlook for second quarter growth is poor. If production is
unchanged in May and June, then second quarter industrial production would be
down 1.1 pct quarter-on-quarter after a rise of 0.8 pct in the first quarter,"
said Neville Hill of CSFB. "That raises the possibility that Germany will be
spending another quarter in recession."
Elga Bartsch and Annemarieke Christian of Morgan Stanley agreed that the
figures point to a drop in output, and also a contraction in GDP, in the second
quarter.
"With manufacturing surveys pointing to more weakness ahead, the data
underline our call for a further contraction in the German economy in the second
quarter," they said.
German GDP fell 0.2 pct in the first quarter after a decline of 0.03 pct in
the fourth quarter of last year.
Ralph Solveen and Elisabeth Andreae of Commerzbank said the April output
decline may be partly related to the fact that Easter was relatively late this
year.
"This meant that vacations around Easter occurred solely in April, not for a
significant part in March, as is generally the case," they said.
Economists said the April figure could be revised to show an even steeper
fall, but there is likely to be some bounce back in output in May.
In the months ahead, industrial output is likely to remain subdued, said
Guilhem Savry of CDC IXIS.
"We don't expect a recovery in industrial activity in the coming months
because of the negative effect of both geopolitical tensions and euro
appreciation," he said.
Commerzbank's Solveen and Andreae said stagnant output will mean that the
German economy will not start to grow again until the autumn.
"For the year on average, we will see zero growth (but) we still expect that
the German economy will start to recover in the course of the second half of the
year," they said.
steve.whitehouse@afxnews.com
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