Ger­man econ­omy ex­pands less than forecast

The Pak Banker - - BUSINESS -

Ger­many's econ­omy ex­panded less than forecast last quar­ter as tur­moil in Greece and a slow­down in China sapped global de­mand.

Ger­man gross do­mes­tic prod­uct rose 0.4 per­cent in the three months ended June 30, af­ter in­creas­ing 0.3 per­cent in the pre­vi­ous quar­ter, the Fed­eral Sta­tis­tics Of­fice in Wies­baden said on Fri­day. An­a­lysts sur­veyed by Bloomberg News pre­dicted an ex­pan­sion of 0.5 per­cent. France's econ­omy stag­nated last quar­ter af­ter grow­ing a re­vised 0.7 per­cent in the Jan­uaryMarch pe­riod, sep­a­rate data showed ear­lier.

While Ger­man do­mes­tic spend­ing is boosted by record-low un­em­ploy­ment and in­ter­est rates, its role as Europe's largest ex­porter leaves it ex­posed to stum­bles in the global econ­omy. The euro-area re­cov­ery is frag­ile and un­even, and China, Ger­many's third-largest trad­ing part- ner, is strug­gling to stem its own slow­down.

"Ex­ports are a key pil­lar for the Ger­man econ­omy and global de­mand is cur­rently too low to sus­tain it at full speed," said Johannes Gareis, an economist at Natixis SA in Frank­furt. "But the Ger­man econ­omy finds it­self gen­er­ally in a com­fort­able sit­u­a­tion and in fact it is set to profit from in­creas­ing tail­winds in the com­ing months."

Euro-area GDP prob­a­bly ex­panded 0.4 per­cent in the sec­ond quar­ter af­ter grow­ing at the same pace in the pre­vi­ous three months, ac­cord­ing to a sep­a­rate sur­vey. That re­port is due from the Euro­pean Union's sta­tis­tics of­fice in Lux­em­bourg at 11 a.m. on Fri­day. Slo­vakia, the Nether­lands, Italy and Por­tu­gal are sched­uled to re­lease na­tional fig­ures be­fore then.

Spain's GDP in­creased 1 per­cent in the sec­ond quar­ter, the fastest pace in more than 8 years, data showed on July 30.

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