Germany’s economic growth halved as estimated in the first quarter on weak trade and government spending, detailed data from Destatis showed Thursday.
Gross domestic product grew 0.3 percent sequentially, slower than the 0.6 percent expansion seen in the previous quarter. This was the weakest growth in more than a year and matched the provisional estimate published on May 15.
Nonetheless, the economy logged its 15th quarter-on-quarter growth in a row, contributing to the longest upswing phase since 1991.
The expenditure-side breakdown of GDP showed positive contribution from domestic demand. Gross fixed capital formation in machinery and equipment rose 1.2 percent and that in construction gained 2.1 percent sequentially despite cold weather.
Also, household final consumption expenditure increased slightly by 0.4 percent. However, government final consumption expenditure decreased for the first time in almost five years, by 0.5 percent.
On the foreign trade, total exports of goods and services dropped 1.0 percent and imports decreased 1.1 percent. As a result, the balance of exports and imports had a downward effect of -0.1 percentage points on economic growth.
On a yearly basis, calendar-adjusted GDP climbed 2.3 percent after expanding 2.9 percent in the fourth quarter. Similarly, price-adjusted GDP growth eased to 1.6 percent from 2.3 percent a quarter ago. The annual rates matched flash estimate.
Once the one-off effects of the first quarter have disappeared, the German economy should rebound in the coming months and quarters, Carsten Brzeski, an ING-diba economist said.
However, admittedly, the ongoing slide in confidence indicators, higher oil prices, Italian politics and the ever-accelerating trade tensions could delay this rebound, he added.
Elsewhere, survey from the market research group GfK showed that consumer confidence is set to weaken in June. The forward-looking consumer sentiment index dropped by 0.1 points to 10.7 in June.
Economic expectations remained the same and income expectations increased slightly. In contrast, propensity to buy suffered a downturn in May.