Robust private consumption helped the German economy grow 0.4 per cent in the first quarter of this year in a signal of a widening recovery, official data showed today.
Private consumption added 0.4 percentage points to growth in GDP, the Federal Statistics Office said, with net foreign trade adding 0.3 percentage points. Stock building sliced off 0.2 points and gross capital investment 0.1 points.
A weather-related drop in construction was a big negative factor, but economists said they expected a pickup in the second quarter as the building sector improved.
Capital equipment spending rose 2.2 per cent on the quarter.
Economists were encouraged by the breakdown of the growth figures after being disappointed by a preliminary report from the Office on May 11th giving the 0.4-per cent growth figure, which fell below a consensus forecast for an expansion of 0.6 per cent.
Germany has relied heavily on its strong export performance to power growth in recent years as high unemployment and weak consumer spending held back the domestic economy.
A rise in VAT due in 2007 could give an added boost to consumer spending later this year as households bring forward purchases to avoid the higher levy.
The German government is forecasting the economy will grow by 1.6 per cent this year.