The German economy got off to a lively start to 2016, according to the Bundesbank's March Monthly Report. The Bank's economists expect growth in the first quarter of 2016 to be at least as strong as, or even to slightly exceed, the solid pace of growth of the second half of 2015. In the third and fourth quarters of 2015, gross domestic product had grown by 0.3% on the respective quarter.

Consumption activity remained lively in the period under review, the Bundesbank's economists write. Moreover, industry and construction had experienced a sharp boost in January, although this was partly attributable to favourable special effects. Industrial output rose sharply according to preliminary data provided by the Federal Statistical Office, with the construction sector, too, reporting a strong increase in activity. By contrast, exports had provided no additional stimulus.

In the second quarter of 2016, however, the Bundesbank's experts believe that the pace of economic growth could slow. They point to a stagnation in the new orders received by industry and the further deterioration in business expectations according to the Ifo business climate index, which has, moreover, been accompanied by a marked decline in previously stable and expansionary output and export expectations. By contrast, consumer sentiment has remained very confident.

Other topics

The March 2016 Monthly Report further analyses the weakness of world trade and sheds light on Germany's balance of payments for 2015. It also discusses the results of the 2014 survey on household wealth and finances in Germany, and includes an article on the significance and impact of the Agreement on Net Financial Assets (ANFA) for monetary policy implementation.