German GDP figures in the second half would be strong, Commerzbank Chief Economist Jörg Krämer said Thursday.
The economist said the stronger than expected economic figures in the second quarter are likely to impact the markets in the coming months. "More and more market participants will bet not only on a "mini-V" but on a full-blown V," Krämer said.
"Therefore, we are still bullish for equities and cautious especially for the short-end of the government bond yield curve."
Nevertheless, one should be aware of two points, first, even after two sound quarters, not even half the ground lost following Lehmann Brothers' collapse would have been regained, and at the end of the year capacity utilization in the corporate sector would still be low.
Second, the strong rebound staged by production belies the fact that the crisis triggered by excessive borrowing has an aftermath which will no doubt translate into only modest growth prospects in the long-run.
The Commerzbank forecast the German economy to grow 0.75% in the third quarter compared with the second. Krämer said, "We envisage a similar result in the fourth quarter, which makes for a stronger starting point in 2010."
For the average of 2010, the Commerzbank predict an above-consensus 2% GDP growth.
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