German federal statistics office reports slower growth rate in Q2

Posted August 16, 2017

Preliminary GDP data for Germany revealed growth of 0.6% in the June quarter, just shy of market forecasts of 0.7%.

The economic data pictured Germany as enjoying stable rates alongside other European Union nations.

The euro fell 0.2 per cent against the dollar to $1.1757.

But the growth rate for the first quarter was revised up to 0.7 percent from 0.6 percent, and the April-June expansion marked a 12th consecutive quarter of growth.

But analysts saw little cause for concern, noting that record-low unemployment and high wages had helped push up demand for imports.

"And there is very little reason to fear a sudden end to the current performance, even though some kind of slowdown from current growth rates looks nearly inevitable".

ING economist Carsten Brzeski says "though some kind of a slowdown from current growth rates looks nearly inevitable" many signs point to more growth ahead and there's "little reason to fear a sudden end to the current performance".

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Economists say that a robust economy is likely to play into the hands of Chancellor Angela Merkel, who has maintained a comfortable polling lead ahead of general elections on Sep. 24.

"The lack of new structural reforms or the lack of investments, both in traditional and digital infrastructure, has so far not affected voters' preferences", he went on.

"All in all, the German economy is still thriving and now the biggest risk is probably policy complacency", said Carsten Brzeski, an economist at ING.

The slight miss was still a solid print for the German economy, with annual growth increasing to 2.1% from 1.7% in Q1.

Demand from households and government increased "markedly", and capital expenditure on machinery, equipment and in construction and other fixed assets rose compared with the first quarter.

Destatis will release a detailed report on the second-quarter results on August 25.