Domestic Demand Drives German GDP Growth in Q1


German GDP expanded by a seasonally-adjusted 0.8 percent in the first quarter of 2014, up from 0.4 percent in the last three months of 2013 and in line with flash estimates. It is the fastest growth rate in three years, boosted by investment and consumer spending amid mild weather conditions.

In a quarter-on-quarter comparison, positive contributions were made by domestic demand only. Especially capital formation increased markedly at the beginning of the year. Gross fixed capital formation in machinery and equipment rose 3.3 percent on the previous quarter. Gross fixed capital formation in construction was even up by 3.6 percent. Also, household final consumption expenditure increased by 0.7 percent on the fourth quarter of 2013. General government raised its final consumption expenditure by 0.4 percent.

However, the balance of exports and imports had a downward effect on the gross domestic product growth in the first quarter of 2014. While imports of goods and services were up 2.2 percent, exports were just slightly higher (0.2 percent) than previous quarter's level, and exports of goods even decreased by 0.5 percent. As a result, the balance of exports and imports made a negative contribution to GDP growth (–0.9 percentage points). This was counteracted by the building of inventories, which supported GDP with a calculated contribution to growth of 0.7 percentage points.

In a year-on-year comparison, economic growth accelerated markedly. The GDP in the first quarter of 2014 was up by 2.5 percent, following a 1.3 percent increase in the fourth quarter of 2013.

Domestic Demand Drives German GDP Growth in Q1


DESTATIS | Joana Taborda | joana.taborda@tradingeconomics.com
5/23/2014 9:15:59 AM