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Germany records fastest growth in three years

Published on 13/05/2004

13 May 2004

BERLIN – The Germany economy has recorded the fastest growth in three years in the first quarter, data released Thursday showed, with a strong performance by the nation’s key export machine helping to balance a another decline in consumer spending.

The data, published by the nation’s Federal Statistics Office, showed Europe’s biggest economy expanding by a stronger- than-forecast 0.4 per cent in the first three months of 2004 compared to the preceding quarter.

The office figures surpassed the 0.2 percent growth which most economic research institutes had predicted for Germany’s gross domestic product.

The report said that there had been a “tangible” upturn in economic performance, fuelled by foreign demand and exports surging forward at twice the rate of imports.

But domestic demand lagged behind with consumer confidence still suffering as a result of high unemployment and a continuing debate about welfare cuts.

With the growth, the first-quarter GDP was nominally 1.5 percent higher than in the first three months of 2003, the office said. Adjusted for calendar factors such as more working days this year, the real annualised rise was around 1 percent, the office said.

The office report with the updated figures did nothing to change the previous figure of a 0.1 percent drop in Germany’s GDP in 2003.

Economics Minister Wolfgang Clement seized on the data as a positive signal.

He went on to express confidence that Berlin’s reforms would also help domestic demand to revive and contribute to the economy together with the foreign trade sector.

However, the powerful German industry and trade confederation DIHK gave a more mixed response to the first-quarter GDP news.

DIHK managing director Martin Wansleben said the Wiesbaden data showed what good position German firms were in concerning their foreign business dealings.

But the ongoing weak domestic demand remained a cause of concern, he cautioned, reflecting the unresolved problems in Germany’s social security system and fears about job losses.

“This makes it clear that a self-supporting domestic contribution to the economic recovery cannot be guaranteed without a determined continuation of the reforms,” Wansleben said.


Subject: German news