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Roundup: German growth slows in Q2, but faster than expected

Xinhua, August 12, 2016 Adjust font size:

Germany's economic growth slowed down in the second quarter of 2016, but faster than expected by economists, official data showed on Friday.

In quarter-on-quarter comparison, Europe's largest economy expanded by 0.4 percent in the April-June period, said German federal statistics office Destatis. It was weaker than the 0.7 percent growth in the first quarter, but twice economists' expectation of 0.2 percent.

"Positive contributions came especially from the balance of exports and imports," said Destatis in a statement, giving no detailed figures. Compared with the first quarter, German exports went up, while imports were slightly down.

Both private consumption and government spending also supported growth, it said, but investment, especially in machinery and equipment and in construction, shrank.

Facing subdued foreign demand, the German growth increasingly relied on domestic economy which was supported by strong private consumption and government spending. The country's jobless rate currently stands at its 25-year-low level.

However, economists warned that, without strong private and public investment, the current growth would not be sustainable.

"Without any doubt, the performance of the German economy since 2009 has been impressive," said Carsten Brzeski, chief economist at ING DiBa bank, "Sadly, as impressive this well-known growth story might be, the current recovery is clearly running on its very last leg."

"Up to now, investment levels (except for investments in real estate) have hardly picked up, despite low interest rates. Increased uncertainties after the Brexit vote, continued structural weaknesses in many euro zone countries and a renewed global slowdown make an organic pick-up investment rather unlikely," he said, "Directly or indirectly, kick-starting investment will require government involvement." Endit