Off the wire
• 8 Palestinians wounded, 26 arrested in Israeli military raids in West Bank  • China beaten 3-1 by Uzbekistan in International Youth Football Tournament  • Jordan, China to build fertilizers factory in Red Sea's Aqaba  • S. Sudan denies army involvement in recent violence at UN camp  • 1st LD: DPRK warns to use strategic weapons against U.S.-S.Korean forces  • PNA calls on UN to act against Israeli settlement  • Kenya probes white pilot over assault on policewoman  • China to launch new anti-graft inspection in 2016  • COSAFA Cup dates shift to accommodate the Region's best footballers  • First round of direct peace talks in Afghanistan likely to happen in early March: QCG  
You are here: 　 Home

Government spending drives up German growth in 2015 Q4

Xinhua, February 23, 2016 Adjust font size:

Government spending on both consumption and public investment drove up economic growth in Germany in the final quarter of 2015, while foreign trade dragged the economy, official data showed on Tuesday.

Compared with the previous quarter, gross domestic product (GDP) of Germany increased by 0.3 percent during the October-December period, said German federal statistics office Destatis, confirming its preliminary calculations earlier this month.

The government's expenditure on consumption, including spending for goods and services provided to refugees, increased markedly by 1 percent in the last quarter, up from the 0.5 percent in the three months through September, contributing 0.2 percentage points to the GDP growth.

Meanwhile, private consumption, though fueled by healthy labour market, increasing wages, low interest rates and falling energy prices, slowed its growth to 0.3 percent from 0.6 percent in previous quarter.

Investment increased by 2.4 percent quarterly, making a contribution of 0.4 percentage points to the growth, according to Destatis. Construction sector led the increase with a growth rate of 2.2 percent as new buildings were needed to accommodate millions of asylum seekers in Germany.

Investment in machines and tools also rose by 1 percent, attributable mainly to the government, Destatis said.

Net exports, a traditional engine for German growth, had a downward effect on growth as exports declined faster than imports, knocking 0.5 percentage points off the GDP growth.

"Although looking positive at first glance, these GDP data are already telling a slightly less optimistic story about the German economy," said Carsten Brzeski, the chief economist at ING-DiBa bank.

"Growth on the back of the public sector, consumption and construction activity might shield the German economy from external headwinds, but is clearly not a strategy for sustainable growth in the medium run," he added.

German companies were concerned about uncertainties over weak global growth and domestic investment environment. In the final quarter of 2015, private investment in machines and tools declined slightly.

A survey by Ifo economic institute showed on Tuesday German business confidence dropped for the third consecutive month in February, hitting its lowest level in over one year.

"(It is a) Wake-up call," Brzeski warned. Endit