WT24 Desk
The German economy picked up speed in the first quarter of 2017, driven by higher investment in construction, machinery and equipment, robust household and state spending as well as strong exports, the Federal Statistics Office said on Friday, Reuters reports.
Europe’s biggest economy grew by 0.6 percent on the quarter in the January-March period after 0.4 percent in the final three months of 2016, the data showed.
This was in line with the consensus forecast in a Reuters poll and the strongest quarterly growth rate since the first quarter of 2016 when the economy expanded by 0.7 percent.
“Investments grew strongly. Due to the mild weather, investments in buildings as well as in equipment were significantly higher than in the fourth quarter of 2016,” the office said in a statement.
Private households and the state increased their consumption expenditures slightly at the beginning of the year, it added.
“In addition, foreign trade also gained momentum and supported growth as exports grew more sharply than imports according to preliminary calculations,” the office said.
On the year, gross domestic product (GDP) grew by 1.7 percent on a seasonally unadjusted basis in the first quarter, which was also in line with the consensus forecast.
“A boom without end in Germany… and despite all the risks,” Bankhaus Lampe analyst Alexander Krueger said, adding it was a good sign that the upswing was based on a broad foundation.
“However, it should be noted that the economy would be humming less without the support of interest rates which are too low for Germany,” he added.
The German growth figures are the latest in a batch of solid data that are likely to help Chancellor Angela Merkel burnish her economic credentials ahead of a Sept. 24 federal election, when she will seek a fourth term.
Merkel’s conservatives have already widened their lead in opinion polls over the main opposition Social Democrats (SPD) who are junior partners in the current coalition and want to unseat Merkel with their chancellor candidate Martin Schulz.
The growth figures also underline the strength of the German economy compared with its peers.
The French economy, the second-largest in the euro zone, grew 0.3 percent in the first quarter, slowing down from 0.5 percent in the final quarter of 2016, preliminary data showed.
For Italy, the third-biggest economy in the 19-member bloc, the national central bank has projected a quarterly growth rate of 0.2 percent. Preliminary data is due next Tuesday.
The Spanish economy powered ahead, however, with a stronger-than-expected growth rate of 0.8 percent in the first quarter, above the euro zone average of 0.5 percent.
