German Economic Growth Picks Up Speed

Written By Unknown on Jumat, 13 Februari 2015 | 18.56

Evidence is mounting that Europe's largest economy is on the path to recovery after its latest GDP figures beat expectations.

Official figures showed Germany achieved growth of 0.7% in the final three months of last year.

The performance followed a feeble increase of 0.1% in the third quarter of 2014 and a decline of 0.1% in the second quarter.

It was much better than the 0.3% rise many economists had expected.

The country's statistical office said it meant the German economy grew by 1.6% last year, despite the slowdown experienced in many of its key export markets, including China.

The main driver of growth was consumer spending while business investment and exports also rose.

Wider GDP data for the eurozone as a whole showed expansion of 0.3% - driven largely by Germany.

There was little optimism in France, the eurozone's second-largest economy, which recorded growth of 0.1% in the quarter - 0.4% over 2014 as a whole.

A slump in investment was blamed as the government of president Francois Hollande has so far been unable to kickstart activity amid record unemployment.

France was among nations which demanded action from the European Central Bank (ECB) to combat the spectre of deflation in the single currency area.

Germany was opposed to the ECB's €1.1tn quantitative easing programme, which is due to begin next month.

Hollande has launched a two-pronged attack to tackle joblessness and push for growth - due to run alongside the ECB's bond-buying to boost money supply.

The first is known as the Responsibility Pact, a series of tax cuts for businesses in return for job creation.

The second is a package of reforms aimed at opening up France's closed economy, including extending the number of Sundays per year when stores can open their doors.

Financial markets reacted positively to the German growth figures, with all the major European stock markets rising in early Friday trading.

The German DAX climbed above the 11,000 mark for the first time at one stage.

The move towards greater risk was also seen as a response to the apparent thawing of Germany's stance on a new Greek debt deal.

Germany is anxious that eurozone nations continue to implement austerity measures crucial to balancing budget deficits.

But it it also mindful of growing frustration among voters, notably in Greece and Spain, that austerity without growth has come at a price for living standards.


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