Bloomberg News

German Quarterly Growth Driven by Exports, Households

August 23, 2012

German Growth Driven by Exports, Households in Second Quarter

The Eurogate container terminal, left, and the HHLA container terminal, right, are seen in Hamburg, Germany. Photographer: Michele Tantussi/Bloomberg

Germany’s economic expansion in the second quarter was driven by exports and household spending, a breakdown of the data shows.

Exports rose 2.5 percent from the first quarter and private consumption increased 0.4 percent, the Federal Statistics Office in Wiesbaden said today. Economic growth slowed to 0.3 percent from 0.5 percent in the first three months of the year, the office said, confirming an initial estimate published Aug. 14. Germany posted a budget surplus of 8.3 billion euros ($10.4 billion), or 0.6 percent of gross domestic product, in the first half, the office said in a separate statement.

Europe’s largest economy is outperforming its euro-area neighbors as the sovereign debt crisis continues to batter nations from Greece to Spain. Exporting companies are benefitting from demand in faster-growing markets outside Europe and unemployment at a two-decade low is bolstering domestic spending. At the same time, the Bundesbank said this week that growth may slow further in the second half due to the prevailing uncertainty.

“German growth remains well balanced but signs of waning strength are increasing,” said Carsten Brzeski, senior economist at ING Group in Brussels. “The sharp drop in new orders from other euro-zone countries since the beginning of the year shows that the euro crisis has already reached the German economy.”

Export Markets

Adidas AG (ADS), the world’s second-biggest sporting-goods maker, this month reported second-quarter profit that topped analysts’ estimates and raised its full-year forecast as revenue increased in China, North America and European emerging markets.

German exports rose more than the 2.1 percent increase in imports in the second quarter so that net trade added 0.3 percentage point to growth, today’s report shows. Private consumption contributed 0.2 percentage point. That helped to offset a drop in company spending.

Capital investment fell 0.9 percent in the quarter, cutting 0.2 percentage point from growth, with spending on plant and machinery down 2.3 percent and construction spending falling 0.3 percent from the first quarter. Domestic demand cut 0.1 percentage point from growth.

Still, Germany’s “good economic development” helped it post its first half-year budget surplus since 2008 in the six months through June, the statistics office said. Revenues rose 2.9 percent while spending increased 0.8 percent.

Second-Half Outlook

“German GDP in the second half of the year is likely to stagnate,” said Thomas Costerg, an economist at Standard Chartered Bank in London. “Domestic consumption will remain too weak to offset slowing foreign demand.”

Commerzbank AG (CBK), Germany’s second-largest bank, said Aug. 9 that profit will fall “significantly” in the second half of 2012 as slowing economic growth results in higher loan-loss provisions and mutes clients’ demand for services.

While the 0.3 percent increase in German GDP in the second quarter beat economists’ initial estimate of a 0.2 percent gain, it wasn’t enough to prevent a decline in the euro area.

The 17-nation economy shrank 0.2 percent in the quarter, the European Union’s statistics office in Luxembourg said on Aug. 14, as GDP in at least five countries fell. The statistics office didn’t release quarterly data for Ireland or Malta, which both suffered contractions in the first quarter.

Waning demand in the euro region, Germany’s biggest export market, is damping business confidence, which fell for a third month in July.

“The business climate in Germany isn’t exhilarating at the moment,” said Alexander Koch, an economist at UniCredit Bank AG in Munich. “There are clearly more downward risks now than before.”

To contact the reporter on this story: Stefan Riecher in Frankfurt at sriecher@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net


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