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German Economy Likely To Maintain Strong Growth Momentum

German economy is likely to continue its strong growth momentum in the coming quarters of this year on the back of robust industrial production, Jack Allen, an economist at Capital Economics, said.

Industrial production fell 1.1 percent monthly in June, reversing a 1.2 percent rise in May, data from Destatis showed on Tuesday.

Nevertheless, the German industry still had a strong second quarter as a whole, Allen observed.

Industrial output grew 1.8 percent sequentially in the June quarter after rising 1.2 percent in the March quarter.

The economist noted that as industry accounts for about 30 percent of the German economy, these data suggest that the sector added about 0.2 percentage points on top of Q1's quarterly GDP growth of 0.6 percent.

Further, retail sales growth also picked up somewhat in the second quarter, the economist added.

"Forward-looking indicators suggest that industry will continue to perform well," Allen said.

Indeed, the recent gains in industrial orders data bode well for output in the near term. The manufacturing current conditions and expectations indices of the Ifo survey rose to multi-year highs in July.

Capital Economics remains very positive about the German economy in the near future, despite June's fall in industrial production and the recent declines in the manufacturing purchasing managers' index.

"We forecast the German economy to expand by an above-consensus 2.3 percent this year and 2.0 percent in 2018," the economist predicted.

by RTT Staff Writer

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