German economic growth accelerated in the second quarter of 2015 but by less than expected, with foreign trade acting as a support and domestic investment braking growth, the Federal Statistics Office said on Friday.
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“Looking forward, we expect the quarterly growth rate to pick up to 0.5 per cent to 0.7 per cent over the next year (consistent with more than two per cent annualised growth) as fiscal austerity fades, risk appetite returns and lending conditions continue to improve”.
European stocks edged higher Friday morning and the euro was slightly lower against the US dollar at $US1.1145. The mood among investors worsened in August due to angst over the unstable global economic outlook but consumer morale remains very strong and firms were feeling more optimistic in July.
Analysts said growth was driven largely by exports, a traditional strength of the German economy. Subsequent revisions have turned that ominous zero into growth of 0.1% as well as raising GDP growth at the start of the recovery, in the second quarter of 2013, and in the final quarter of 2014, from 0.3% to 0.4%.
The consensus among economists was that the 19-strong currency club would grow by 0.4%, the same as in the first quarter.
“Business surveys have suggested that the euro-zone economy lost some momentum over recent months, which could reflect some fallout from the Greek crisis and potentially weakness in the Chinese economy“, said Nick Kounis, an economist at ABN Amro Bank NV in Amsterdam. The Netherlands and Austria could only manage 0.1% growth while Portugal, which is battling to recover while complying with a Brussels-inspired austerity drive, managed 0.4%.
The eurozone’s hopes for a strong economic recovery this year have soured over the past couple months, partly because of the crisis over Greece’s future in the currency zone and fading growth in China.
Finland, which was one of the loudest voices against offering Greece a new bailout deal, was the only country in the Eurozone to contract last quarter as its recession continued apace. The finance ministry has also sounded cautious, saying in a report last month that GDP was likely to increase at around the same rate as between January and March.
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“Germany’s fundamentals remain solid and it is in a position to look through the volatility”, said Andreas Rees, an economist at UniCredit SpA in Frankfurt.
