Germany's finances in surplus as growth picks up

23rd August 2013, Comments 0 comments

Germany's finances are back in surplus as growth rebounded in the second quarter, official data showed on Friday.

Germany ran up a general government surplus of 8.5 billion euros ($11.3 billion) in the first six months, equivalent to 0.6 percent of output, the national statistics Destatis calculated.

"The budgets of central government, state governments, local government and social security funds benefited from a generally good employment situation and a stable economic development in the first half of 2013 compared with other European countries," Destatis said in a statement.

At the same time, the statisticians confirmed a preliminary estimate that the German economy, the biggest in Europe, expanded by 0.7 percent in the second quarter, powered by robust consumer and public spending, as well rising investment.

Private consumption grew by 0.5 percent, public spending was up 0.6 percent and gross capital formation or investment rose by 0.9 percent, Destatis calculated.

This was partly owing to "weather-related catch-up effects following the unusually long and cold winter," the statistics office said.

In addition, 2.2 percent more goods and services were exported in the second quarter and imports were up by 2.0 percent.

"Consequently, the balance of exports and imports supported GDP, contributing 0.2 percentage points to growth," it said.

ING DiBa economist Carsten Brzeski said the second-quarter growth figures were "simply wonderful. (It) is like one of your all-time favourite movies: you never get tired of watching it."

The data "confirmed the impressive growth comeback of the German economy," he said and predicted that institutes that have been forecasting a rapid slowdown in the second half of the year would now be compelled to change their outlook.

"Up to now, it looks as if the economy is gaining rather than losing momentum. German confidence is not only benefiting from strong domestic economic activity and hopes of a soft and not a hard landing of emerging economies but also from the latest improvements in the eurozone," Brzeski said.

"It looks as if new growth hopes for the rest of the eurozone are stimulating German confidence, which in turn could lead to higher German economic growth and could eventually become growth-supportive for the eurozone," the expert said.

Natixis economnist Johannes Gareis was more cautious.

"For the rest of this year, we expect the German economy to continue to grow, albeit at a slower rate," he said.

Jennifer McKeown at Capital Economics agreed.

"In all, we are encouraged by these data and maintain our recently-revised forecast for the economy to expand by 0.5 percent this year as a whole. But the recovery looks set to be moderate, with growth of perhaps 1.0 percent in 2014 and 1.5 percent in 2015 -- not enough to cause a meaningful rebalancing in the eurozone."

By contrast, Economy Minister Philipp Roesler was more optimistic.

"German economic growth is gathering momentum on all fronts. The data published today confirm that domestic demand is driving the recovery," Roesler said.

"Germany is both the growth engine and an anchor of stability in Europe," the minister insisted.

© 2013 AFP

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