5 Wildly Different Global Growth Stories
In the past few hours, we've received multiple Q1 GDP reports. Here are the highlights from five key economies.
Japan Explodes. GDP grew at a 5.9% annualized pace, crushing expectations for 4.2%. The key driver of grow appears to be the April consumption tax hike, a Q2 phenomenon that encouraged consumers to pull forward their purchases to Q1. This caused domestic demand to add 1.7 percentage points to quarterly growth. "Looking ahead, we anticipate that the strong growth in Q1 will be partially offset by negative growth in Q2 due to the subsequent decline in domestic demand after the consumption tax hike," said Societe Generale's Kiyoko Katahira.
France Halts. GDP growth was 0.0%, missing expectations for 0.1% growth. "The household component was especially weak, with both headline expenditures and household investment reporting significant declines," noted Pantheon Macroeconomics' Ian Shepherdson. "Gross fixed capital formation also fell a notable 0.9% from the last quarter of 2013, but preliminary figures are usually substantially revised. Net trade contributed a negative 0.2% which is bad for France but good for its main trading partners in the eurozone."
Germany Grows. GDP grew at a healthy 0.8% annualized pace. "This is a very strong report which solidifies the idea of Germany as the eurozone's growth engine," said Pantheon's Shepherdson. "We don't get numerical details for the sub-components from the German statistical office in this first report, but all components of domestic demand are reported to have risen strongly."
Italy Contracts. GDP unexpectedly declined 0.1% annualized versus expectations for 0.2% growth. That's just not good.
Portugal Tanks. GDP plunged 0.7% annualized versus expectations for 0.1% growth. That's worse.
Last month, we learned GDP growth decelerated to a disapppointing 0.1% pace in the U.S. Meanwhile, everyone agrees the Chinese economic growth engine in slowing to just over 7%.