German economy slows, but French growth picks up in Q1

13th May 2015, Comments 0 comments

Economic growth in Germany, Europe's powerhouse, slowed in the first three months of the current year, while the region's number two economy, France, experienced its strongest growth in nearly two years, data showed on Wednesday.

The German economy, Europe's biggest, grew by 0.3 percent in the first quarter of 2015, slightly slower than expected, data published by the federal statistics office Destatis showed on Wednesday.

At the same time, French growth picked up to 0.6 percent from zero percent at the end of last year and the strongest growth since the second quarter of 2013, the INSEE national statistics office said.

The better-than-expected figures in France suggest there is a good chance the French economy will grow faster over the whole year than the 1.0 percent Paris currently estimates.

"This first figure is very encouraging," said French Finance Minister Michel Sapin.

"Our growth perspectives for 2015 are today clearly comforting."

In Germany, however, analysts were disappointed, since they had been pencilling in first-quarter growth of 0.5 percent after GDP expanded by 0.7 percent in the fourth quarter of 2014.

"The German economy continued on its growth path, but at a slightly slower momentum" in the first quarter, Destatis said.

The main growth driver was domestic demand, with both private households and the public sector increasing spending. Investment also increased, particularly in construction and equipment, exports increased slightly and imports rose more strongly.

On a 12-month comparison, GDP grew by 1.1 percent in the January-March period compared with the same three months a year earlier, Destatis said.

The German GDP data were "good but not good enough," said ING DiBa economist Carsten Brzeski.

The German economy was continuing to benefit from earlier structural reforms and was being given extra tailwind by the European Central Bank's monetary policy measures, the expert argued.

"All in all, the GDP data confirm the ongoing solid performance of the eurozone's largest economy. However, as witnessed in yesterday's soccer Champions League semi-final, a solid performance is not (always) sufficient to stay at the top," he said.

"As Bayern Munich will probably now discuss new investments in its current squad, the German government should do the same for its economy," Brzeski concluded.

© 2015 AFP

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