Germany: Economy to remain on a solid course in 2016 – Goldman Sachs

By FXStreet FXStreet (Delhi) – Dirk Schumacher, Research Analyst at Goldman Sachs, notes that the German economy surprised on the upside this year, growing by 1.5% on our estimates, as all demand components contributed positively to growth.

Key Quotes

“We expect the economy to expand at a broadly similar pace next year on the back of the lagged effects from several tailwinds, but also robust income growth for households and a generally positive external environment.

As the remaining spare capacity of the economy dwindles further, we also expect underlying inflationary pressure to become more visible and expect core inflation to rise to +1.9% in 2016 from +1.2% in 2015.

Close to one million refugees have arrived in Germany in 2015, and managing the refugee crisis is likely to be the biggest challenge for the German government next year. A “unilateral national solution” (closure of the borders) cannot be ruled out should the current strategy of increased international cooperation fail.”

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Source:: FX Street