German economy grows 0.4pc in Q4

FRANKFURT AM MAIN: Germany’s economy expanded by 0.4 per cent in the last quarter of 2016, official data showed on Tuesday, confirming that Europe’s powerhouse grew 1.9 per cent over the whole year.

The growth rate in the period from October to December — adjusted for price, seasonal, and calendar effects — followed 0.7 per cent in the first quarter, 0.5 in the second and 0.1 in the third, the federal statistics office Destatis said.

“Compared with the previous quarter, positive impulses came from domestic activity,” the statisticians found, pointing to increased state and household spending and a rise in investment, especially in construction.

Germany’s traditionally powerful exports contributed less to growth in the fourth quarter, as imports increased faster, Destatis added.

“The strong labour market, low interest rates, low inflation, higher wages and increased government consumption due to the influx of refugees” all contributed to growth in 2016, economist Carsten Brzeski of ING Diba bank noted. But external the election and shocks like Brexit of Donald Trump highlighted the economy’s “most vulnerable parts: industrial production and exports,” he noted.

Inflation in Germany stood at 1.9 per cent in January, the statistics office said in a separate release, confirming preliminary figures issued last month.

A recent spike in inflation — which hit 1.7 per cent in December after just 0.8 in October and November — can largely be traced back to energy prices, recovering from a deep trough in early 2016. Energy costs increased some 5.9 per cent in January compared with the same month last year, Destatis calculated.

If energy costs were left out of the measure, inflation would have stood at a lower 1.5 per cent last month, the statisticians went on.