Germany's GDP growth slows in Q2

Aug 23, 2007 - The pace of growth in Europe's biggest economy slowed from the first quarter to the second quarter, the German government said Thursday as it issued its final numbers on growth for the country of 82 million people.

The Federal Statistics Office, or Destatis, said that gross domestic product rose 0.3 per cent in the April-June period from the first three months of the year. Year-on-year growth slowed to 2.5 per cent from 3.3 per cent in the second quarter of 2006, the agency said.

The quarter-to-quarter and year-on-year figures were in line with the expectations of analysts polled by Dow Jones Newswires and mirrored the preliminary figures that were released August 14.

GDP in the second-quarter was driven in part by exports abroad, not surprising given that Germany is the biggest exporter in the world, ahead of China and the United States.

The statistics office said growth in the second quarter was driven mainly on the export side, with its contribution to GDP growth a lot higher than that from domestic demand, which also grew.

Growth in exports was 9.4 pct compared with the 6.1 pct in imports, with the net result from external trade contributing 1.7 percentage points to GDP growth.

Expenditures of private households posted an increase of 0.6 pct compared with the first quarter while those from the state were "somewhat lower" from the first quarter.

Investments in machinery were up 2.5 pct while in construction, it was down 4.8 pct. Inventories were down 0.6 pct.

The persistent strength of the euro which recently has hovered around record highs against the US dollar carries the risk of European exports becoming more expensive and less competitive.

Germany has been emerging over the past two years from a lengthy period of economic stagnation that pushed up unemployment and prompted Germans to tighten their purse strings.