German Q1 GDP was confirmed at -3.8% q/q and a wda -6.9% y/y, in line with the preliminary number. The breakdown, which was available for the first time showed that the contraction was mainly driven by sharp declines in export and investment. Exports dropped 9.7% q/q, while imports declined 5.4% q/q. Construction investment contracted 2.6% q/q and capital investment a massive 7.9% q/q, as companies are spooked by the global demand slowdown and tightened financing conditions. Private consumption rose 0.5% q/q, helped by the government’s wreckage incentive, which has helped to boost car sales in the first quarter. Government consumption also rose, but a more modest 0.3% q/q. All in all pretty much as expected with investment and exports hit hard by the slowdown in global demand and the financial crisis. Q1 is likely to be as weak as it gets, with forward looking survey indicators pointing to a stabilization of growth in the second half of the year.
</p>