German growth slows but remains robust

Image source, Reuters

Germany's economic growth slowed in the second quarter of the year but remained robust, according to official data.

The country's gross domestic product rose by 0.6% in the three months to June, the Federal Statistics Office said, which was slightly lower than analysts' forecasts.

Growth was driven by consumer and state spending plus company investment.

However, the strong domestic economy sucked in a higher rate of imports dampening overall growth.

'Staying power'

The Federal Statistics Office, Destatis, said that "the development of foreign trade... had a downward effect on growth because the price-adjusted quarter-on-quarter increase in imports was considerably larger than that of exports".

Alexander Krueger, an economist at Bankhaus Lampe, said: "The German economy is proving its staying power, the upswing continues."

He said the European Central Bank's low interest rates were boosting the eurozone's largest economy.

Destatis also revised upwards its growth estimate for the first quarter of the year to 0.7% from the initial estimate of 0.6%.

Carsten Brzeski, analyst at ING Bank, said Germany's economic success just went "on and on and on" but he cautioned that exports could be dented by a stronger euro, weaker-than-expected US growth and Brexit uncertainty.

The French economy, the second largest in the eurozone, grew 0.5% in the second quarter, helped by stronger exports according to preliminary data.

Spain's economy grew by 0.9% in the April-to-June quarter, while Italy's preliminary data is expected on Wednesday.

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