Keeping in Europe: The production of computer chips and batteries in Europe should be excluded from EU rules on state aid, said German Chancellor Angela Merkel. — Reuters
Frankfurt: Strong foreign trade and buoyant consumption drove Germany’s economy, Europe’s largest, to better-than-expected growth in the second quarter, federal statistics office Destatis said on Wednesday.
Gross domestic product (GDP) grew by 0.4% between April and June, adjusted for seasonal, calendar and price effects - twice as fast as analysts surveyed by Factset predicted.
However, the final figure, which confirmed a preliminary Destatis reading earlier in August, represented a slowdown from the unexpectedly strong 0.7% expansion in the first quarter.
”Compared with the previous quarter, the positive impulses above all came from foreign trade,” Destatis said in a statement.
According to preliminary estimates, exports of goods and services increased by 1.2% between April and June, while imports fell by 0.1%.
Overall, the data showed “mixed signals” in the German economy.
Households increased spending by 0.2% and the state by 0.6% compared with the previous quarter.
But business investment in capital goods fell by 2.4% and in construction by 1.6%.
Looking back at the previous year, the economy was 1.8% larger between April and June than the same period in 2015, adjusting for price and calendar effects - a slightly slower growth rate than the first quarter’s 1.9%.
In the coming quarters, “private consumption should remain an important growth driver on the back of low inflation, low interest rates, low unemployment and higher wages,” analyst Carsten Brzeski of ING Diba bank said, while Germany’s refugee crisis will continue to bolster state spending.
Investment remains “the economy’s Achilles heel,” he noted, adding that Chancellor Angela Merkel must produce “a clear vision for Europe” with other EU leaders to reassure investors in Germany. - AFP
Win a prize this Mother's Day by subscribing to our annual plan now! T&C applies.
