Four German Stocks That Are Buys Right Now

Last Friday, Germany’s central bank reduced the country’s growth and inflation forecasts for 2016. At the same time, the Bundesbank emphasized that strong domestic demand and a shrinking labor market would continue to add strength to the Eurozone’s largest economy.

Such a forecast is along predictable lines since Germany has remained the economic bloc’s strongest performer over an extended period. Other data released recently also indicate that its status as the region’s economic leader is unlikely to change quickly. Adding stocks from Germany to your portfolio would be an extremely prudent option.

Domestic Demand to Drive Growth

According to the Bundesbank, Germany’s GDP is expected to increase by 1.7% this year and 1.4% in 2017. This is lower than respective estimates of 1.8% and 1.4% released in December last year. However, growth is expected to rebound in 2018 and come in at 1.6%.

However, the central bank’s president Jens Weidmann said that such a downward revision was not a reason for great concern. Weidmann emphasized that the economy is on a “relatively firm” footing. The reduction in growth forecasts was mostly attributable to lower demand for the country’s exports. However, this is being viewed as a positive development for an economy often believed to be reliant on external demand.

Weidman was quick to emphasize that strong domestic demand would be the bedrock for economic strength. Such a level of demand would be a product of higher household income and a healthy labor market.

GDP Rises in Q1

An increase in domestic consumption was the major reason for a rise in Germany’s first quarter GDP growth. According to official data released last month, the country’s economy grew by 0.7% in the year’s first quarter. This is twice as high as the rate of 0.3% experienced in the last quarter of 2015. 

The country’s economy has experienced growth for seven consecutive quarters since 2014. Several market watchers believe that the country has gained from the ECB’s monetary stimulus measures. Additionally, the country’s central bank has reduced the country’s inflation forecast for this year from 1.1% to 0.2%. This is largely a result of a decline in oil and commodity prices.

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