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German economy: steady as she goes ....

Wednesday, August 24, 2016 - 01:39

A rise in German exports, higher state spending and private consumption more than compensated for weaker investment in construction and equipment, helping Europe's biggest economy grow at a modest, albeit slower pace in the second quarter. David Pollard reports.

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If not exactly racing, the German economy is paddling along nicely thank you. A 0.4 per cent rise in the second quarter was a slowdown from the first - but still beat the average euro zone rate. Higher exports helped the most - they were up 1.2 per cent on the quarter - in part thanks to some unexpected demand. (SOUNDBITE) (English) CMC MARKETS ANALYST, MICHAEL HEWSON, SAYING: "What was more interesting was that exports to the UK made up a good part of that GDP outperformance and I think the performance of the UK economy is certainly going to be a key bellwether in the context of GDP growth for the German economy over the course of the rest of the year." But while Germany's been basking in over 30 degrees centigrade, investment spending's at the bottom end of the thermometer. Down 2.1 per cent on the quarter - giving extra lift to the debate over whether it should spend more of a record budget surplus. At over 18 billion euros in the first half, the biggest since East and West Germany reunified in 1990. It's not though, to everyone's taste - even, perhaps, that of the German chancellor. (SOUNDBITE) (English) CMC MARKETS ANALYST, MICHAEL HEWSON, SAYING: "Mrs Merkel will be very, very reluctant to even countenance that ahead of next year's elections. Ultimately, German taxpayers are very cognisant of the fact that yields are already very, very low and actually in some cases negative, and I think there's a very, very low tolerance threshold." State spending was still up 0.6 per cent and added 0.1 per cent to GDP. And the German consumer spent an extra 0.2 per cent on the quarter - still hungry to buy, it seems, whatever the weather.

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German economy: steady as she goes ....

Wednesday, August 24, 2016 - 01:39