German economy grows 0.4 per cent in 2nd quarter

BERLIN – The German economy, Europe’s biggest, grew 0.4 per cent in the second quarter — a slower pace than in the previous three-month period but better than economists had forecast.

The quarter-on-quarter figure for the April-June period reported Friday by the Federal Statistical Office compared with a growth spurt of 0.7 per cent in the first quarter of 2016. It was, however, much better than the 0.2 per cent pickup in gross domestic product that economists had predicted.

The economy’s performance was boosted by foreign trade as exports grew while imports declined slightly, the statistics office said. Consumer and government spending also supported growth, but investment — particularly in equipment and construction — was lower following a strong first-quarter showing.

The German economy has seen generally solid growth over recent years while several other countries in Europe struggled. The traditionally export-heavy economy lately has been helped increasingly by domestic demand, with unemployment low.

However, economist Carsten Brzeski at ING-DiBa cautioned that “to sustainably extend the current recovery, or initiate a new cycle, investments will have to pick up.”

That, he said, could be complicated by “increased uncertainties after the Brexit vote, continued structural weaknesses in many Eurozone countries and a renewed global slowdown” and require the government to stimulate investment directly or indirectly.

Britain voted to leave the European Union in a referendum June 23, a vote that took place at the end of the second quarter.