German Q2 economic growth rises on higher exports, consumption

Germany’s gross domestic product expanded during the second quarter, following higher proportion of state expenses, coupled with surge in exports and private consumption. Further, the upbeat economic growth offset the weaker investment by companies in Europe's biggest economy.

Germany expanded 0.4 percent in Q2, with exports adding 0.6 percentage points to GDP as exports rose 1.2 percent on the quarter and imports inched down 0.1 percent, data released by Federal Statistics Office Destatis showed Wednesday.

Further, state spending rose 0.6 percent q/q, contributing 0.1 percentage points to growth as authorities spent more to accommodate and integrate a record influx of migrants. Also, consumer spending edged up 0.2 percent on the quarter, adding 0.1 percentage points to GDP in the three months to June.

Moreover, investment in plant and equipment fell 2.1 percent on the quarter, subtracting 0.4 percentage points from overall economic growth. Overall household consumption registered a 0.2 percent expansion with government spending increasing 0.6 percent. There was, however, a decline of 2.4 percent in capital spending with the construction sector also making a negative contribution for the quarter.

Meanwhile, there will be further surprise over evidence of some vulnerability in the domestic economy given extremely low interest rates. This also showed up in the sharp dip in services-sector expectations to the lowest level for close to two years in yesterday’s PMI data, reports added.