EMU Economic Indicators Preview

(Week of 9 to 15 February 2009)

• German GDP (Q4 2008): down
• EMU GDP (Q4 2008): down
• EMU industrial production (December): down

German GDP will probably have plummeted quarter-on-quarter in Q4 2008, just as output in the producing sector did. The previous quarters' data might be revised slightly. On 13 February, Destatis (the German Federal Statistical Office) is publishing its “flash release” on Q4 German GDP; a detailed breakdown of the components will follow on 25 February. Private consumption could have remained more or less unchanged, while all other components are expected to have decreased. Net exports, changes in inventories and investment in machinery and equipment are likely to have been the main drag on overall GDP growth. French, Italian and EMU GDP are all likely to have contracted significantly in Q4 too.

French, Italian and EMU industrial production will probably have continued declining in December, because all of the correlated indicators dropped. Following the seasonal pattern, the German trade balance will probably have deteriorated in December, whereas the German current account might have even improved.

German consumer price inflation in January is likely to be confirmed at -0.5% mom and 0.9% yoy. In the coming months, inflation is expected to decrease further due to oil price related base effects. Furthermore, the ongoing recession and the financial crisis are dampening aggregate demand, thus limiting the scope for raising prices.

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