Core’s export resilience won’t last

The most surprising element of last week’s Q2 GDP figures was the robustness of exports from France and Germany. Previously strong demand from Asia and the US appears to have been the key, while the depreciation of the euro may have helped too. But with global growth slowing, we don’t expect the resilience of the core’s exports to last much longer, while domestic demand looks set to remain subdued. As such, while we have nudged up our forecast for French GDP growth this year – and for the euro-zone as a whole - we still see both Germany and France slipping into recession in 2013.