Sound bites: Germany's recovery outlook cautiously optimistic

There are two words which sum up Germany’s recovery outlook – cautiously optimistic. It is a Goldilocks growth outlook – not too hot, not too cold, but just right. Germany’s recovery is making positive ground with industrial orders and output both showing good underlying growth performance - and not at the expense of its Eurozone partners. Germany’s growth model maybe changing a little this time around, with exports less the leading edge and German consumers starting to show better signs of spending more thanks to low unemployment. If growth looks more balanced between domestic demand and exports, it should be to the net benefit of the Eurozone as a whole as import penetration starts to pick up for its Eurozone trading partners. German industrial production dipped by 1.7% in July, but this was largely the result of a correction from the strong 2% growth spurt in June. It is nothing to worry about as the underlying recovery trend remains intact. It is far too soon for German policymakers to be talking about the ECB normalising interest rates back towards higher levels. The German recovery is still in need of more nurturing, while the troubled Eurozone economies are still need significant nursing. While there is bound to be a battle royal between Bundesbank hawks and ECB doves, Draghi’s forward guidance on keeping rates low, if not lower, over the future should prevail.