Germany fails to match Q1 growth, slowdown remains less drastic than expected

Germany’s economic growth grew at a faster-than-expected pace, beating market consensus but stagnation in Italy's economy showed the eurozone is still struggling to build the necessary momentum to lift the ailing economy.

In quarterly adjusted terms, Europe's largest economy and economic powerhouse grew by 0.4 percent, beating expectations of 0.2 percent growth, data released by country’s statistics agency showed Friday. However, the statistics office does not release a detailed breakdown of GDP growth in its flash estimate, but it said that growth came primarily from foreign trade.

Moreover, quarterly growth in the first quarter was 0.7 percent. Experts have said that growth in the first quarter was unsustainable, compared to that in the second quarter.

While Friday’s figures were better than expected, some economists voiced concern about the underlying strength of a country that is often dubbed the region’s economic powerhouse, reports said.

Stronger trade figures meant that the German economy managed to maintain more momentum than most had expected. Destatis said exports had been higher and imports lower. Household and government spending continued to support growth, but investment fell. Meanwhile, the eurozone's tepid recovery partly reflects weak demand for exports from large developing countries that are themselves struggling to revive flagging economies.

However, the eurozone had started the year relatively strongly, as lower energy prices gave households more spending power. But the recovery in oil prices in recent months snuffed out that growth driver in the second quarter, and the economy now appears on a trajectory to post the same modest growth rate as last year at best.