German economy zips along as trade, consumer spending drive growth

Bloomberg

Germany’s robust economic upswing extended into the fourth quarter, buttressing growth in the euro area as policy makers prepare to wind down stimulus.
Gross domestic product in Europe’s largest economy increased 0.6 percent from the third quarter, the Federal Statistics Office in Wiesbaden said on Wednesday. That’s in line with the median estimate in a Bloomberg survey. The economy expanded 2.9 percent from a year earlier when adjusted for calendar days.
The confirmation of Germany’s vibrant economic vitality comes after the European Commission said the region’s expansion is more balanced than at any time since the financial crisis, and the International Monetary Fund raised its global outlook for 2018. The 19-nation bloc recorded its best performance in a decade in 2017, raising confidence among officials at the European Central Bank that a pickup in inflation will allow them to scale back asset purchases.
“It’s a pretty healthy end of the year,” said Jennifer McKeown, chief European economist at Capital Economics Ltd. in London. “Going into this year, we should see consumer-spending growth pick up and continue to drive the economy.”
Fourth-quarter growth was driven by a strong increase in exports, with total trade making a positive contribution, according to the report. Government consumption and equipment investment increased, while private spending remained largely unchanged and construction slipped.
Eurostat will update its estimate for fourth-quarter growth in the euro area at 11 a.m. in Luxembourg. It reported a 0.6 percent increase in GDP on Jan. 30. The Italian economy expanded a quarterly 0.3 percent in the final three months of 2017, while Dutch GDP increased 0.8 percent.
Consumer-price growth in Germany slowed to 1.4 percent in January, the weakest since May, according to a separate report. An engine of growth for the currency bloc’s economy in recent years, Germany is benefiting from rising demand for industrial goods from within the country and abroad, as well as healthy consumption underpinned by steadily declining unemployment.