Germany achieves budget surplus of 18.5 bln euros in H1

Germany achieved a budget surplus of 18.5 billion euros (about 20.7 billion U.S. dollars) in the first half of 2016, official data showed on Wednesday, on the back of a solid economy and moderate expenditure.

"The budgets of central government, state government, local government and social security funds continued to benefit from both a positive development of employment and economy and moderate spending policies," said German federal statistics office Destatis in a statement.

Compared to the same period last year, German public revenue increased 4.2 percent to 692.9 billion euros, while expenditure went up by 3.6 percent to 674.4 billion euros.

According to Destatis, the most important source of government income was taxes which jumped 4.8 percent yearly to 365.1 billion euros. The increase of expenditure was mainly due to higher spending on asylum seekers, over one million of whom arrived in Germany last year.

The high revenue offered the German government sufficient ammunition to cover costs of increasing spending on refugees while sticking to its target of balanced budget in coming four years.

However, economists said Germany's public investment also needs to be increased in order to maintain a sustainable growth.

In a separate report on Wednesday, Destatis said the German economy expanded by 0.4 percent in the second quarter, slower than the growth of 0.7 percent in the first three months. Weak investment was the main drag.

"The economy's Achilles' heel remains the lack of new investment," said Carsten Brzeski, chief economist at ING DiBa bank, "To kick-start investment in an aging economy, some government support is needed." (1 euro = 1.12 U.S. dollars) Endit