German Economic Growth Accelerates
Economic growth in Germany, Europe’s largest economy, accelerated to the fastest pace in 12 years in the first quarter as companies stepped up spending on machinery and construction.
Gross domestic product rose 1.5 percent from the fourth quarter, when it increased 0.3 percent, the Federal Statistics Office in Wiesbaden said today.
Germany’s resilience is giving the European Central Bank room to leave interest rates at a six-year high to fight inflation.
The euro rose half a cent after the report to $1.5535 at 9:35am in Frankfurt.
The statistics office said investment was the main driver of first-quarter growth and consumer spending also contributed. While exports aided annual growth, they didn’t contribute to expansion in the quarter.
In the year, the economy grew 2.6 percent when adjusted for the number of working days, the office said.
The European Union’s statistics office in Luxembourg will publish first-quarter growth figures for the euro area later today.
Economists expected 0.5 percent expansion before today’s national figures were released, according to the median estimate in a Bloomberg survey.
French first-quarter GDP growth, at 0.6 percent, also exceeded forecasts, while the Austrian economy expanded 0.8 percent. In Spain, growth slowed to 0.3 percent from 0.8 percent and in the Netherlands to 0.2 percent from 1.2 percent.
German growth will slow to 1.4 percent in 2009, less than the economy’s long-term average growth rate of 1.5 percent, the country’s government-sponsored research institutes said April 17.
The ECB may start cutting borrowing costs in September to shore up the euro-region economy, a Bloomberg survey of economists shows.
ECB will cut its benchmark rate if the growth rate is in danger and if inflation is in control.
For now, it’s a lot of “if”, and EURO is covering its loss for now, quoting at posting time (16:40 - GMT+8 ) 1.5513 against the USD, with a high at 1.5546.
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