Over the past few days sentiment has brightened considerably in Germany, and there are even signs of euphoria in some places – Munich and Dortmund in particular. But unlike Germany's two Champions League semi-finalists the economic releases of late have been a sobering disappointment following the encouraging data at the start of the year. For this reason we have slightly lifted our forecast for German Q1 GDP growth from 0.1% qoq to 0.3%. At the same time, though, we cut our expectations for Q2 from 0.4% to 0.2%. On balance this leaves the annual average unchanged at 0.3%. [more]

As year end and the policy precipice in the US draw near, we find the global economy trudging along at significantly below trend, held back by uncertainty about US fiscal policy prospects and a European economy still mired in mild recession. Emerging markets are still pushing things along, but they too are not invulnerable to a policy misstep at this juncture... [more]

...Forecast tables

GDP	(% yoy)
	2011	2012F	2013F
United States	1.8	2.2	2.2
Japan	-0.5	2.0	2.1
Euroland	1.4	-0.6	-0.6
Germany	3.0	0.7	0.1
France	2.0	0.0	-0.6
Italy	0.5	-2.4	-1.8
United Kingdom	1.0	0.3	0.5
Australia	2.4	3.6	2.5
Russia	4.3	3.4	3.1
China	9.3	7.8	8.2
Canada	2.4	1.8	2.1
India	7.5	4.1	6.3
Brazil	2.7	0.9	3.0

 

In January the Japanese central bank raised its inflation target from 1% to 2%. At his first central bank meeting in April, the new governor surprise BoJ watchers with considerably more aggressive monetary easing than had been expected. This change of monetary regime is seen as a risk for other export nations – notably Germany. However, such concern is only partly justified for Germany. [more]