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Exports, Consumption Boost German Growth In Q3

Exports, Consumption Boost German Growth In Q3
11/23/2012 3:57 AM ET

The German economy expanded in the third quarter of 2012 in line with the preliminary estimates, largely supported by foreign demand as well as domestic consumption, a detailed report from the Federal Statistical Office showed Friday.

The seasonally adjusted gross domestic product rose 0.2 percent quarter-on-quarter in the third quarter, unrevised from the preliminary estimate. Nonetheless, it was the weakest growth rate recorded so far this year after a 0.3 percent increase in the second quarter and 0.5 percent gain in the first three months of the year.

Exports of goods and services rose 1.4 percent quarter-on-quarter, while imports increased 1 percent. Thus, net trade contributed an impressive 0.3 percentage points to the third quarter growth. However, the pace of growth in exports and imports was weaker than in the second quarter.

Data revealed mixed results for domestic demand conditions. Consumer spending grew 0.3 percent sequentially and government expenditure rose 0.4 percent. Investment in construction too increased, by 1.5 percent.

However, investment in machinery and equipment continued to decrease, with a 2 percent quarter-on-quarter fall in the third quarter. In addition, inventories also decreased, deducting 0.3 percentage points from GDP. Total investment was flat from the previous quarter, which saw a 0.4 percent slump.

Price-adjusted GDP rose 0.4 percent in the third quarter compared to the same period in 2011. The calendar-adjusted GDP was up 0.9 percent on an annual basis. Both the figures were unchanged from the preliminary estimates.

Bundesbank expects the economy to shrink in the fourth quarter, while the Finance Ministry has warned of a "significant slowdown" in growth during the period.

At the same time, the German government forecast the economy to expand 1 percent in 2013, after a 0.8 percent expansion this year. The European Commission estimates a 0.8 percent expansion for both 2012 and 2013.

Germany's Ifo Institute is slated to release the business confidence survey results for November shortly. Economists expects the business climate index to edge down to 99.5 from 100 in October. The expected downturn could be the result of investors losing faith in Europe's ability to contain the debt crisis.

by RTT Staff Writer

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