German growth rises at fastest pace in three years

Lucy Hill
August 16, 2017

Unadjusted data had the economy growing by 0.8 percent on the year in the second quarter.

The economic data pictured Germany as enjoying stable rates alongside other European Union nations.

Foreign trade, however, weighed on Germany's performance, it said, because imports grew more strongly than exports, on a quarterly basis.

"The economy looks strong and robust", supported by domestic demand, said Andreas Rees, UniCredit's chief Germany economist.

He said the European Central Bank's low interest rates were boosting the eurozone's largest economy.

But the growth rate for the first quarter was revised up to 0.7 percent from 0.6 percent, and the April-June expansion marked a 12th consecutive quarter of growth.

German growth slows slightly in second quarter: data

Carsten Brzeski, analyst at ING Bank, said Germany's economic success just went "on and on and on" but he cautioned that exports could be dented by a stronger euro, weaker-than-expected United States growth and Brexit uncertainty.

He cautioned, however, that the main drivers supporting the domestic economy, such as rising employment, rising wages and increased government spending, could lose some momentum in the coming quarters. Though a stronger currency shows that confidence is returning to the eurozone economy, it does have the potential to weigh on exporters as it increases the price of their goods in global markets, all other things being equal.

However, it was a strong enough result to help push the annual rate of growth up to 2.1%, Germany's fast rate of growth since the first quarter of 2014. She's seeking a fourth term in September.

According to the flash Eurozone release, GDP increased 0.6% for the second quarter which matched the preliminary estimate and was in line with consensus forecasts.

The figure was down from a 0.7 per cent pace in the first quarter and slightly weaker than market expectations of 0.7 per cent.

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