That was faster than the growth of 0.3 percent notched up in the preceding quarter and also faster than the 0.5 percent analysts had been predicting for the first quarter of this year.
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Germany’s economy logged its fastest growth in two years in the first quarter on the back of domestic demand and investment, according to provisional data published by Destatis on Friday.
On a calendar-adjusted basis, GDP growth improved to 1.6 percent from 1.3 percent.
The mild weather increased activity in the construction sector, and the investment in equipment also increased.
However, the development of foreign trade had a slight downward effect on growth because imports increased more markedly than exports, Destatis said.
This had changed, Eurostat said, as factories’ output declined again in February and March – down by 1.2 percent and 0.8 percent respectively, and basically erasing the strong gain of 2.4 percent in January.
Gross domestic product expanded 0.7 percent sequentially in the first quarter, faster than the 0.3 percent growth in the previous three months and 0.6 percent expansion economists had forecast.
That view was shared by economists, who said the impact of weaker exports – a trend fuelled by a stronger euro currency – would eventually be felt as demand from emerging markets ebbs. Oppenheim economist Ulrike Kastens.
In 2016, private consumption is expected to expand by around 1¾% and is likely to mainly drive the economic growth, noted Nordea Bank in a research report.
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“Private households and the government increased their spending and investments were also higher”, the statement continued. But ING economist Carsten Brzeski said the strong data would provide more ammunition for German politicians to resist calls by the International Monetary Fund and the Organisation for Economic Co-operation and Development (OECD) to reform the economy. “The strong growth performance also shows what now is the biggest risk for the German economy: complacency”, Brzeski said.
