German Economy Expands 0.6% in 2Q

• German Economy Expands 0.6% in 2Q

The Europe’s largest economy continued to grow at a solid pace in the second quarter.

The economy expanded by 0.6 percent in the April-June quarter. While this is below analysts’ 0.7 percent projection, the Federal Statistics Office revised up first quarter growth to 0.7 percent. Indicating that German first half of the year economy remains healthy ahead of general election.

Growth in the quarter was mainly driven by domestic consumption, according to the statistics office. Both consumers and government spending rose substantially in the quarter, while investment in equipment and construction increased from the first quarter.

Also, the report shows economic output was weighed upon by the surge in imports which rose faster than exports.

Germany has seen “several years of pretty strong economic performance,” Jack Allen, a European economist at Capital Economics in London, said before the report. “The unemployment rate is very low, the economy has done very well particularly by the euro-zone standards, so it’s quite possible that it will boost support for the incumbent party.”

On a yearly basis, the economy expanded 2.1 percent from a year ago.

So far, the euro single currency has gained about 12 percent against the US dollar this year and projected to attain parity level against the pound sterling by 2018.

“Exchange-rate swings are not going to have the same effect as on, say, Spanish exports, but we are still going to see some impact,” Florian Hense, an economist at Berenberg Bank in London, said before the report. “If you look at the PMI as the first leading indicator it signals that some sort of plateau has been reached.”