Tallahassee Journal

German Growth Surprise Driven by Domestic Demand

German Growth Surprise Driven by Domestic Demand

German economic growth accelerated at the end of last year while France’s slowed, signaling that the euro-area recovery remained uneven as the European Central Bank prepared to pledge unlimited quantitative easing. German gross domestic product surged 0.7 percent in the fourth quarter after expanding 0.1 percent in the previous three months, the Federal Statistics Office in Wiesbaden said today. The French economy grew 0.1 percent after 0.3 percent in the July-September period.  1200x-1

Seven years after the onset of the global economic crisis, the 19-nation euro area is still plagued by falling prices and high unemployment, while a showdown between Greece and its European partners over the country’s debt has rekindled the risk of a euro break up. A slump in oil prices is helping domestic demand and more stimulus is the pipeline from the QE plan by the ECB that has already weakened the euro.

“It’s not a story of ‘here comes the boom,’” said Nick Kounis, head of macro and financial-markets research at ABN Amro Bank NV in Amsterdam. “But we are starting to see signs of a more convincing recovery. The euro remained higher after the report and traded at $1.1428 at 9:41 a.m. Frankfurt time. The benchmark DAX index broke through 11,000 for the first time.

Euro-area GDP probably expanded 0.2 percent last quarter after growing at the same rate in the third, according to a separate survey. That report is due from the European Union’s statistics office in Luxembourg at 11 a.m. today. Italy and Portugal are scheduled to release national figures before then. The Slovak economy grew 2.4 percent in the fourth quarter from a year ago, and the Dutch recorded an increase in GDP of 0.5 percent from the third quarter.

Spain, the euro-area’s fourth-largest economy, reported on Jan. 30 that its economy expanded at the fastest pace in seven years in the fourth quarter, with GDP rising 0.7 percent from the previous one. “The German economy turned out to be strong in a difficult global economic environment, benefiting especially from a strong domestic demand,” Roderich Egeler, president of the national statistics office, said in Berlin on Jan. 15. At the time, the office said GDP increased a quarter of a percent in the fourth quarter and 1.5 percent in 2014.