Domestic demand pushes German economy into growth

The German economy expanded by more than expected in the second quarter of the year, according to figures from the Statistisches Bundesamt Deutschland (SBD).

German gross domestic product (GDP) rose by 0.9 per cent compared to the second quarter of 2012, on a non-seasonally adjusted basis.

Analysts had expected to see the economy grow by 0.3 per cent following the previous quarter’s 1.6 per cent annual contraction (downwardly revised from -1.4 per cent).

According to provisional calculations, the GDP in the second quarter of 2013 was achieved by 41.8m people in employment domestically - an increase of 0.6 per cent (242,000 people) from the year before.

However, adjusted for differences in working days, annual GDP rose by 0.5 per cent - up from a 0.3 per cent contraction in the previous quarter.

Seasonally adjusted, quarter-on-quarter GDP growth was 0.7 per cent, slightly better than the 0.6 per cent growth expected, and up from no movement the quarter before.

The SBD said positive contributions to second quarter GDP came primarily from domestic demand. Final consumption expenditure was up both for households and government. There was also a significant increase in fixed capital formation - probably due to a catch up after an unusually long and cold winter.

The quarterly increase in exports was a little larger than growth of imports, so the trade balance also contributed to GDP growth.

The news follows unexpectedly strong growth in France too.