Germany: GDP growth picks up in final quarter of 2016
February 23, 2017
The pickup in GDP growth in the fourth quarter of 2016 was confirmed by detailed data published by Destatis on 23 February. GDP grew 0.4% quarter-on-quarter, up from 0.1% in Q3 which had been the lowest result since Q2 2014. The result was in line with both the flash estimate and market expectations. The acceleration was driven by strong domestic demand, which offset a negative contribution from the external sector. On an annual basis, GDP expanded 1.2% in Q4, down from Q3’s 1.5%. For 2016 as a whole, GDP growth was 1.9%, up from 1.7% in 2015.
The components of domestic demand improved across the board, reversing Q3’s trend. Fixed investment grew 0.8% in Q4, following a 0.2% contraction in Q3. The uptick was fueled by the amplifying boom in the construction sector, as the country attempts to remediate its housing shortfall. Government consumption also increased strongly (Q4: +0.8%; Q3: +0.2%), on the back of continued strong refugee-related spending. Private consumption growth also accelerated, albeit at a more moderate pace, inching up from 0.2% in Q3 to 0.3% in Q4. Household spending has been buoyed by continued robust wage growth, a tightening labor market and high consumer confidence.
The external sector’s net contribution to overall growth continued to deteriorate and fell to minus 0.4 percentage points in Q4, down from Q3’s minus 0.3 percentage-point contribution. The deterioration came despite another record year for German exporters, as exports grew at a slower pace than imports. Exports were up 1.8% in Q4, contrasting the 0.3% contraction registered in Q3, while imports jumped 3.1%, up from 0.4% in Q3.
Author: Christopher Mc Innes, Economist