Germany's economic growth accelerated more-than-expected on domestic spending and exports in the fourth quarter, while investment dragged expansion in France.
Gross domestic product advanced 0.7 percent sequentially, much faster than a modest 0.1 percent rise in the prior quarter, data from Destatis revealed Friday. This was the fastest growth in three quarters and also exceeded a 0.3 percent rise forecast by economists.
Households markedly raised their spending and investment increased from the prior quarter in machinery and equipment as well as construction. Exports of goods considerably improved further.
Looking ahead, the German economy looks set to continue surfing on a wave of economic well-being, Carsten Brzeski, an economist at ING Bank NV said.
With the strong labor market, wage increases, low energy prices and extremely low interest rates, consumers should continue to spend it, the economist said. He also expects the weak euro to definitely benefit German exports.
Elsewhere, the second largest Eurozone economy expanded only 0.1 percent sequentially, slower than the third quarter's 0.3 percent rise, the French statistical office Insee reported.
French growth was driven by spending and robust foreign demand, while investment and changes in inventories made negative contributions.
The euro area GDP data is due later today. The currency bloc is forecast to grow 0.2 percent sequentially in the fourth quarter.
Germany's calendar-adjusted GDP advanced 1.4 percent on a yearly basis in the fourth quarter, following 1.2 percent expansion in the previous three months. Economists had forecast the rate of expansion to remain unchanged at 1.2 percent.
Similarly, adjusted for price variations, GDP rose 1.6 percent compared to 1.2 percent in the previous quarter.
Destatis today raised its whole year growth for 2014 to 1.6 percent from 1.5 percent estimated on January 15. In 2013, the economy grew only 0.1 percent.
In 2014, the French economy expanded 0.4 percent, the same rate of growth as seen in 2013.
The European Commission expects the largest Eurozone economy to grow 1.5 percent this year and 2 percent in 2016. The French GDP is estimated to rise 1 percent in 2015 and 1.8 percent next year.
For comments and feedback: editorial@rttnews.com