German economic growth slows to 0.3% in 1st qtr
Investor confidence stuck at five-year low: survey
BERLIN, May 15, (Agencies): German economic growth slowed to 0.3 percent in the first quarter, its weakest performance in more than a year, though analysts largely blame one-time factors like bad weather and expect a rebound.
The quarter-on-quarter growth reported Tuesday by the Federal Statistical Office compared with an expansion of 0.6 percent in the fourth quarter of 2017 and 0.7 percent in the third.
It was the slowest pace since the third quarter of 2016, when growth was also 0.3 percent. Economists had predicted a slightly brisker 0.4 percent, but concurred that the lackluster showing doesn’t ring alarm bells.
The statistics office said that, while investment in construction and equipment rose, government spending was lower and both exports and imports decreased. That fits a recent pattern of German growth being supported above all by domestic demand.
Despite the setback, it was the 15th consecutive quarter of growth, making this Germany’s longest upswing since 1991.
The first-quarter data were “probably distorted” by an early Easter vacation, cold winter weather and nowended strikes, said Carsten Brzeski, an economist at ING-DiBa in Frankfurt. He said that there are promising signs of a rebound over the coming months.
“While uncertainties and downside risks remain — mainly stemming from a possible escalation of the current trade tensions — there is, in our view, little reason to doubt the under- lying strength of the current recovery,” Brzeski said in a research note.
Meanwhile, investor confidence in Germany remained at its lowest level since November 2012 in May after plunging last month, a regular survey showed Tuesday.
The ZEW economic institute reported a reading of -8.2 points in its monthly barometer for the second time in a row.
“Relatively good results for German exports and industrial production in March were overcome by new politically driven uncertainty,” ZEW chief Achim Wambach said in a statement.
Before April, the last time confidence among financial players fell into the red was in July 2016, shortly after Britain’s shock vote to quit the European Union.
“The cancellation of the Iran nuclear agreement by the United States and fear of a further escalation in the trade conflict with the US, as well as rising oil prices, burdened expectations for the economic outlook in Germany,” Wambach said.
ZEW’s latest survey comes the same day as official data showed German GDP growth halved its pace at the start of the year, to 0.3 percent, although analysts argued that oneoff effects like strikes, cold weather and a flu outbreak bore much of the blame.