German economy continues steady growth in 2016, rate of expansion strongest in five years

According to a preliminary estimate released by the Federal Statistical Office on Thursday, price-adjusted gross domestic product (GDP) in Germany rose by 1.9 percent in 2016, beating economists' expectations for 1.8 percent rise. The rate of expansion was the strongest in five years and an improvement on the previous year. In calendar-adjusted terms, the GDP growth rate was slightly lower at +1.8 percent.

In the previous two years, German GDP growth stood at 1.7 percent in 2015 and 1.6 percent in 2014. On the longer-term perspective, growth in 2016 was by half a percentage point higher than the ten years average of +1.4 percent.

Europe's largest economy is benefiting from rising private consumption and increased state spending on refugees, compensating for a weaker contribution from trade amid sluggish demand from major trading partners and emerging markets.

Household final consumption expenditure rose a price-adjusted 2.0 percent on the previous year. The increase in government final consumption expenditure at +4.2 percent was markedly larger still. Gross fixed capital formation in machinery and equipment was up 1.7 percent on the previous year.