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German Q2 growth solid but unspectacular as investment drags

The economy had expanded 0.4 percent in the three months to March, continuing a modest recovery.

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The carry over from the first half of the year means the government’s 1 per cent growth forecast for the year is still well within reach but could make it harder to beat that target, as many expected, analysts said.

The second quarter figure was lower than the 0.2pc expansion predicted by economists.

Data from neighboring France also missed expectations, as GDP growth there stalled in second quarter.

Growth of 0.4 percent in Germany and zero in France missed estimates by Bloomberg surveys, in which economists forecast increases in gross domestic product of 0.5 percent and 0.2 percent, respectively, for the currency bloc’s two largest economies.

Italy’s GDP was up only 0.1 percent, and the Netherlands also showed a weak 0.2 percent growth.

Greece appeared headed for a messy exit from the euro, with uncertain consequences for the region, while concerns over the Chinese economy were roiling financial markets around the world. They put greater pressure on the U.S.to generate output for both itself and its trading partners, and suggest the European Central Bank will keep its aggressive stimulus measures in place at least through next autumn as planned.

“Exports grew a lot faster than imports thanks to the weak euro, with goods exports in particular growing strongly”.

Germany, the biggest economy in Europe, benefited from debt crisis in the euro zone as the interests it had to pay investors for its bonds reduced when “bad news” happened. In many eurozone countries, he said, “unemployment is still very high and consumers are still spending with a lot of caution”.

Zalando SE, the German online fashion retailer, said on Thursday that sales will rise as much 31 percent this year and vowed to hire more staff and build warehouses to spur growth. The pace of quarterly growth strengthened from an already strong 0.9% in the first quarter to 1.0% in the second quarter, among the highest in the euro area.

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Ahead of the data, the euro held steady against its major rivals.

AFP  File  Daniel Roland Recent data has shown inflation and unemployment little changed despite a massive European Central Bank stimulus programme