German economy grows below expectations in Q4

The German economic growth expanded below the consensus expectations in the fourth quarter of 2016. The economy continued with its moderate growth, expanding 0.4 percent quarter-on-quarter on a seasonally adjusted basis, noted the Federal Statistical Office (Destatis). Thus, the German economic situation in 2016 was characterised by strong and stable growth. Consensus expectations were for the Germany economy to grow 0.5 percent in the fourth quarter. For the whole of 2016, the German economy grew 1.9 percent.

On a sequential and seasonally adjusted basis, the German economic growth was positively underpinned by domestic demand. General government final consumption expenditure rose notably, while household final consumption expenditure was up slightly again.

Capital formation also saw positive development. In particular, fixed capital formation in construction was notably up on the third quarter.  However, the provisional data shows that the development of foreign trade had a downward impact on growth as the price-adjusted quarter-on-quarter rise in imports was greater than that of exports.

The German economic growth also accelerated on a year-on-year basis. The price–adjusted GDP growth accelerated 1.2 percent in the fourth quarter, as compared with 1.5 percent growth seen in the third quarter and consensus expectation of 1.7 percent. The statistical carry-over impact at the end of 2016 is 0.5 percent. This is the pace of GDP change that would be obtained for 2017 if the seasonally and calendar adjusted GDP stayed at the level of the fourth quarter of 2016 for all quarters, noted Destatis.