Germany: Headwind from the euro - Commerzbank

Dr Jörg Krämer, Chief Economist at Commerzbank, suggests that in the last few quarters the German economy has benefited from a weaker euro and falling oil prices.

Key Quotes

“But the tailwinds from the FX market have now turned into headwinds. In April 2016, the real external value of a notional D-mark was around 3½% higher than in April 2015. A year before, the FX market still gave German exports a powerful boost. In April 2015, the external value of a notional D-mark was even more than 8% lower than in April 2014.

The oil price will also become less important as a driving factor in the coming quarters. We expect oil prices to rise again.

Impetus will continue to come from the additional public expenditure necessitated by the large influx of refugees. However, spending will not rise much faster than in past quarters, so that this is also unlikely to result in stronger German economic growth.”