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 %.


  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.

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

    Not impossible, but in my humble opinion rather unlikely.

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

  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 %).