German economy sizzles

Rachel More AND Andrew McCathie –
Germany posted its strongest economic growth in five years as it released 2016 data showing that a surge in consumer spending and government support for refugees helped to power Europe’s biggest economy.
The nation’s gross domestic product (GDP) for last year came in at the top end of analysts’ forecasts, expanding by 1.9 per cent, after growing by 1.7 per cent in 2015, the Federal statistics Office (Destatis) said on Thursday.
German GDP is likely to have grown by about half a percentage point quarter-on-quarter in the final three months of 2016 — more than double its third quarter expansion rate, Destatis said in a preliminary estimate. “The German economy remains a stronghold of continuity,” said Unicredit chief German economist Andreas Rees, adding “its growth performance was rock solid.”
Germany has now chalked up seven years of uninterrupted economic growth. That is in stark contrast to many of its euro zone partners, which have struggled to remain on an expansion path after attempting to cut back high debt and deficit levels.
Destatis also reported on Thursday that Germany posted its third consecutive annual budget surplus, which came in at 0.6 per cent of GDP in 2016.
Taken together, the GDP data and the healthy state of German finances have helped to provide a buffer for the nation’s economy as it heads into what analysts have warned could be year of uncertainty.
In particular, analysts have pointed to the risks surrounding fraught negotiations about Britain’s plans to leave the European Union; the new Donald Trump-led US Administration; and a string of potentially unpredictable elections in Europe, including in Germany.
The German data also added to the brighter picture that has recently emerged across the euro zone, with the EU’s statistics office Eurostat saying on Thursday that industrial production in the 19-member currency bloc rocketed up by a more-than-forecast 1.5 per cent in November.
However, foreign trade acted as a minor drag on GDP last year after a 3.4-per-cent rise in imports outpaced a 2.5-per-cent gain in exports, Destatis reported. Instead, the statistics office attributed the pickup in German growth to a surge in private consumption as well as higher state spending to provide refuge for the hundreds of thousands of asylum seekers who have arrived in the country in recent years fleeing wars in the Middle East and Africa. — dpa