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Business

German economy gains steam amid boosted consumption

Europe's largest economy has expanded more and faster than expected by analysts. Growth in the second quarter was helped by German consumers willing to spend more as low interest rates made saving money a losing game.

Germany's growth domestic product (GDP) rose by 0.7 percent in the second quarter compared to the first three months of the year, the National Statistics Office, Destatis, reported Wednesday.

It notes that larger-than expected growth came on the back of increased consumer spending and more public expenditure ahead of Germany's general election on September 22.

Another contributing factor was the catch-up effect following the unusually long and harsh winter, Destatis said. Foreign trade also gave a boost, with exports rising faster than imports.

France out of recession

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Consumer confidence buoys German economy

"The eurozone is being pulled out of recession, with Germany having a lion's share in this," Dekabank economist Andreas Scheuerle told Reuters news agency. "But this momentum may not be upheld in the second half of the year, with growth expected to hover between 0.3 and 0.4 percent."

Europe's second-biggest economy, France, managed to return to growth in the second quarter, announcing a 0.5-percent rise in GDP which was also attributed to strong domestic consumption.

Sustained growth will be crucial for France's efforts to bring its public spending deficit back below the EU-prescribed ceiling of 3 percent.

hg/hc (dpa, AFP, Reuters, AP)

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