German Economy Logs Modest Growth As Estimated In Q1
Germany’s economy logged a modest growth in the first quarter as the expansion in investment was partially offset by the contraction in exports and household spending, detailed data from Destatis showed on Wednesday.
Gross domestic product grew 0.2 percent sequentially in the first quarter, in contrast to the 0.3 percent decline seen a quarter ago.
Although mild, the expansion helped the economy to avoid a technical recession.
On a yearly basis, GDP advanced by a price-adjusted 4.0 percent, faster than the 1.8 percent growth registered in the fourth quarter.
The statistical office confirmed both quarterly and annual growth figures for the first quarter.
Compared with the fourth quarter of 2019, the quarter before the Covid-19 crisis began, GDP decreased 0.9 percent.
Amid rising prices, household consumption dropped 0.1 percent from the preceding quarter, when spending declined 1.3 percent. Government expenditure gained 0.1 percent, following a 0.2 percent rise.
Gross fixed capital formation registered an increase of 2.7 percent. Due to the mild weather in the first quarter, investment in construction advanced 4.6 percent despite the considerable price increases. At the same time, investment in machinery and equipment rose 2.5 percent.
Due to lower exports of automobiles in the face of continuing problems in international supply chains, overall shipments decreased 2.1 percent. Meanwhile, imports rose 0.9 percent. As a result, foreign trade had downward effect on GDP.
The war in Ukraine and the continuing Covid-19 pandemic have intensified existing distortions, including interruptions in supply chains and rising prices, President of the Federal Statistical Office Georg Thiel said.
“Despite difficult framework conditions in the global economy, the German economy started 2022 with a slight growth”, Thiel added.
Macro data from Germany has not brought any relief and confirmed that the economy entered a mild contraction in the second quarter, ING economist Carsten Brzeski said.
The inventory build-up and weak consumption in the first quarter, as well as very weak consumer confidence, clearly dent the optimism currently sent by traditional leading indicators, the economist observed.
Elsewhere, survey results from the market research group GfK showed that consumer confidence is set to improve in June amid an easing in restrictions related to the coronavirus pandemic. The forward-looking consumer sentiment index rose to -26.0 for June from a revised -26.6 in May.
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