German economy grows by 0.6% in the first quarter of 2017

The German economy is continuing to grow. According to data provided by the German Federal Statistical Office (Destatis), in the first quarter of 2017 gross domestic product (GDP) rose 0.6% on the final quarter of 2016 after adjustment for price, seasonal and calendar variations. In the second half of the previous year, GDP growth had been somewhat more moderate, at 0.2% in the third and 0.4% in the fourth quarter. The economic performance in the first quarter of 2017 was achieved by 43.7 million persons in employment, which was an increase of 638,000 or 1.5% from a year earlier.

In a press release, Destatis reported that, according to provisional calculations, the quarter-on-quarter comparison showed positive contributions from both domestic and foreign demand. It pointed to a sharp rise in investment, explaining that "due to the mild weather, fixed capital formation especially in construction, but also in machinery and equipment was markedly up compared with the fourth quarter of 2016." In addition, it noted that households and general government had increased their consumption expenditure slightly at the beginning of the year. The development of foreign trade was also more dynamic and underpinned growth, with provisional calculations by Destatis showing a sharper rise in exports than imports.

Economic growth accelerated year on year, too. According to figures from Destatis, price-adjusted GDP in the first quarter of 2017 was 2.9% higher than in the same period a year earlier. After adjustment for the exceptionally strong calendar effects due to the timing of public holidays, GDP increased by 1.7%. According to the press release, this was broadly in line with the calendar-adjusted growth rates of the previous year (1.7% in the third quarter and 1.8% in the fourth quarter of 2016).

Bundesbank to publish semi-annual projection in June

In the April issue of its Monthly Report, the Bundesbank already identified positive growth momentum for the German economy, which it attributed to the sharp rise in industrial output and optimistic sentiment in the manufacturing sector. "In line with this, real exports rose significantly of late and industrial enterprises estimate the future outlook for exports as very favourable," Bundesbank economists explained in the Monthly Report. "Finally, private consumption is likely to have remained a mainstay of growth on the back of positive labour market developments and the upbeat sentiment among consumers," they continued. The Bundesbank will publish its semi-annual projection of the outlook for the German economy at the beginning of June.