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Germany sees record growth

01/09/2010, by Propfund Germany

The first-quarter growth figure for Europe's biggest economy also was revised upward to 0.5 percent - more than double the initial reading of 0.2 percent. "The recovery of the German economy, which lost momentum at the turn of 2009/2010 is really back on track," the Federal Statistical Office said as it released the preliminary second-quarter figures. It was the strongest performance since the reunification of West Germany and communist East Germany two decades ago, the office said. The previous best was 1.9 percent growth in the first quarter of 1992.

Economists had expected second-quarter growth of 1.3 percent. In year-on-year terms, output rose by 3.7 percent. While foreign trade was one of the key drivers of growth, household and government consumption also contributed to the rise in gross domestic product, the statistical office said.

An improving global economy has fed demand for German exports, while industrial orders and business confidence have been rising.

The economy shrank by a painful 4.9 percent last year - easily the worst performance since World War II.

The government still has an official forecast for this year of 1.4 percent growth, but Economy Minister Rainer Bruederle said Friday that expansion of "well over 2 percent" is now possible. "One cannot speak of an economic miracle, but we are experiencing an XL upswing at the moment," Bruederle said.

Carsten Brzeski, an economist at ING in Brussels, said the economy benefited from "a catching up in the construction sector after the harsh winter and strong foreign demand for German goods."

(Source: Propfund Germany, www.propfund.com)