Montag, 20. April 2009

Germany's 2009 GDP

Forecasts for Germany's 2009 GDP currently range from -3 % (Allianz) at the most optimistic to -7 % (Commerzbank) at the gloomiest end.

Let's take a closer look at what the various forecasts actually imply:

Seasonally-adjusted quarterly GDP dropped all through 2008, i.e. Q1 GDP was the highest, and it went downhill from there:

Q1 to Q2: -0.5 %
Q2 to Q3: -0.5 %
Q3 to Q4: -2.1 %

We know that Q1 2009 will be dismal, probably around -3% compared to Q4. Compared to Q1 last year, that would be a drop of 6.0 %.

Now let's assume the economy will stagnate after Q1, i.e. no further fall, but also no growth.

This would mean that the year-on-year growth gets better (or rather: less bad) from quarter to quarter:

- Q2 would be -5.6 % compared to Q2 last year
- Q3 would be -5.0 %
- Q4 would be -3.0 %

Average for 2009 would be -4.9 %.

In other words:

Anybody who forecasts a drop of more than 5 % implicitly assumes that things will keep going downhill:

- To reach -6.0 %, you would need to (e.g.) assume further quarter-on-quarter drops of 1 % in Q2 and Q3, followed by a stagnating Q4.

- To reach -7.0 %, you would need to assume drops of 1.8 % in both Q2 and Q3.

And anybody who forecasts a drop of less than 5 % assumes that things will start improving:

- To reach -4.0 %, you would need to assume quarter-on-quarter growth of 0.7 % in Q2 and Q3, followed by a stagnating Q4.

- To reach -3.0 %, you would need to assume growth of 1.5 % in both Q2 and Q3.

My personal guess is that things will more or less stagnate beyond Q1, possibly grow a bit. That would leave us between -4.5 % and -5.0 %.

Kommentare:

  1. Thank you for the analysis. On the other end this means that Allianz is banking on an significant growth in the remainder of the year.

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  2. Yes, that appears to be the underlying assumption of the Allianz forecast.

    Not impossible, but in my humble opinion rather unlikely.

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  3. Didn't you write some time ago that you personally expect -4 % ...?

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  4. Indeed. I've become a bit more pessimistic. Mostly because Q1 appears to be worse than expected (-3 % from previous quarter seems to be the current best estimate, whereas I had previously assumed it would be in the range of -2 % to -2.5 %).

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