German Retail Sales - Economic Data Preview
German Retail Sales are expected to add 0.2% in March, suggesting receipts shrank at an annual pace of -0.3%, an improvement from the previous month’s -5.3% decline. The improvement likely comes as the government’s 82 billion euro stimulus package works its way through the economy. On balance, the data is unlikely to reveal trends supportive of a sustained return to Euro strength. The world’s fourth-largest economy could afford a far greater fiscal effort considering the kind of spending being done by its major counterparts, most notably the US. This coupled with a deliberately slow-moving ECB suggests private demand will likely be comparatively slower to pick up the baton after the government’s boost is exhausted, keeping unemployment at elevated levels and holding back spending. By extension, this is set to weigh on overall economic growth. Indeed, a survey of economists conducted by Bloomberg suggests German GDP growth will underperform that of the US by -2.45% and -1.45% in 2009 and 2010, respectively (those figures for the overall Euro Zone are -0.8% and -1.35%). Broadly speaking, this means US interest rates will rise faster than those in Europe, arguing for EURUSD downside in the months to come.