You are using an older browser version. Please use a supported version for the best MSN experience.

German economic growth slows

dpadpa 24/08/2016

Germany's economy grew by 0.4 per cent in the three months to the end of June, figures show.

Economic growth in Germany slowed during the second quarter as a pickup in exports, private consumption and public spending failed to offset a slump in corporate investment, the Federal Statistics Office (Destatis) says.

Europe's biggest economy grew by 0.4 per cent in the three months to the end of June. In the first quarter it expanded by 0.7 per cent after mild winter weather boosted construction activity in the earlier part of the year, Destatis said.

Net trade added 0.6 per centage points to gross domestic product (GDP) - the biggest single contribution to growth - as second-quarter exports climbed and imports fell slightly.

The contribution from trade came despite concerns that the slowdown in China and other major emerging markets would hit German foreign demand.

"As regards domestic demand, there were mixed signals," Destatis said.

Public spending rose 0.6 per cent in the three months to the end of June, contributing 0.1 per centage points to GDP.

The increase in state spending came after Berlin boosted outlays on integration programs and shelter for about one million refugees who arrived in the country over the last year.

Corporate investment slumped during the second quarter, trimming 0.4 percentage points off GDP.

Second-quarter investment in machinery and equipment contracted by 2.4 per cent after expanding by 1.2 per cent in the first three months. Investment in the construction sector fell 1.6 per cent.

Private consumption only added 0.1 percentage points to GDP.

Hiring also continued to increase during the second quarter with the workforce expanding by 529,000 or 1.2 per cent to 43.5 million, Destatis said.

"Private consumption should remain an important growth driver," said ING Bank economist Carsten Brzeski. "The economy's Achilles' heel, however, remains the lack of new investment," he said.

Germany's central bank, the Bundesbank expects the nation's economy to post solid growth in the three months to the end of September pointing to a further pickup in exports and a rebound in corporate investment.

Despite the slowdown in second-quarter growth Destatis said Germany posted a budget surplus of 1.2 per cent of GDP during the first half of the year.

image beaconimage beaconimage beacon