German Economy Gets Boost From Consumers and Exports

German People Shopping

Germany restored its position as Europe’s economic powerhouse last quarter as domestic spending surged and trade contributed to growth.

Gross domestic product in the region’s largest economy expanded 0.7 percent in the three months through December, the Federal Statistics Office said today, confirming a Feb. 13 estimate. Private consumption climbed 0.8 percent, capital investment rose 1.2 percent and exports jumped 1.3 percent.

“Powerful trickle-down effects from a lower oil price and a weaker euro exchange rate continued to lift the German economy,” said Andreas Rees, an economist at UniCredit SpA in Munich. “It is hard not to be reasonably optimistic in Germany these days.”

Private consumption added 0.4 percentage point to GDP last quarter and net trade added 0.2 percentage point. Capital investment added 0.2 percentage point, driven entirely by construction. Inventories subtracted 0.2 percentage point.

ECB Stimulus

The Bundesbank said last month that the German economy has overcome the “weak phase” it hit early last year as lower oil prices and higher salaries bolster consumption. Real wages increased 1.6 percent in 2014, the most since data collection started in 2008.

Germany’s economic resurgence contrasts with France, which barely grew in the three months through December, and Italy, which stagnated after two consecutive quarters of contraction. The Spanish economy, the euro area’s fourth-largest, expanded at the fastest pace in seven years in the fourth quarter, with GDP rising 0.7 percent.

German Economy Gets Boost From Consumers and Exports

Mar 03 2015 at 05:00 UTC No Comments

German People Shopping

Germany restored its position as Europe’s economic powerhouse last quarter as domestic spending surged and trade contributed to growth.

Gross domestic product in the region’s largest economy expanded 0.7 percent in the three months through December, the Federal Statistics Office said today, confirming a Feb. 13 estimate. Private consumption climbed 0.8 percent, capital investment rose 1.2 percent and exports jumped 1.3 percent.

“Powerful trickle-down effects from a lower oil price and a weaker euro exchange rate continued to lift the German economy,” said Andreas Rees, an economist at UniCredit SpA in Munich. “It is hard not to be reasonably optimistic in Germany these days.”

Plunging energy costs have been described by Bundesbank President Jens Weidmann as a mini-stimulus that puts more money in consumers’ pockets. The decline has also contributed to a negative inflation rate in Germany and the euro area that prompted the European Central Bank to announce quantitative easing, weakening the euro and making German exports more competitive.

Private consumption added 0.4 percentage point to GDP last quarter and net trade added 0.2 percentage point. Capital investment added 0.2 percentage point, driven entirely by construction. Inventories subtracted 0.2 percentage point.

ECB Stimulus

The Bundesbank said last month that the German economy has overcome the “weak phase” it hit early last year as lower oil prices and higher salaries bolster consumption. Real wages increased 1.6 percent in 2014, the most since data collection started in 2008.

Germany’s economic resurgence contrasts with France, which barely grew in the three months through December, and Italy, which stagnated after two consecutive quarters of contraction. The Spanish economy, the euro area’s fourth-largest, expanded at the fastest pace in seven years in the fourth quarter, with GDP rising 0.7 percent.