High exports, increase in investment boost German economy in 2017

BREAKING NEWS — The German economy defied increased political risks and picked up speed in the first quarter of 2017 as companies invested more, consumers and the state continued to spend and exports soared despite the threat of rising protectionism.

Europe’s biggest economy grew by 0.6 per cent in the quarter from the quarter before, when it expanded 0.4 per cent, the Federal Statistics Office said on Friday.

That was the strongest quarterly growth rate since the first quarter of 2016, when the economy grew 0.7 per cent. It was in line with the consensus forecast in a Reuters poll.

The figures are the latest in a batch of solid data that are likely to help Chancellor Angela Merkel and her centre-right CDU/CSU bloc to burnish their economic credentials before a Sept. 24 federal election, when she will seek a fourth term.

Merkel’s conservatives have already widened their lead in opinion polls over the main opposition Social Democrats (SPD), who are junior partners in the current coalition and want to replace Merkel with their chancellor candidate, Martin Schulz.

“A boom without end in Germany… and despite all the risks,” Bankhaus Lampe analyst Alexander Krueger said, calling it a good sign that the upswing was based on a broad foundation.

“However, it should be noted that the economy would be humming less without the support of interest rates, which are too low for Germany,” he added, in reference to the European Central Bank’s ultra-loose monetary policy.

The Federal Statistics Office said investments in buildings and equipment grew strongly, partly due to a mild winter, while households and state authorities increased their expenditures slightly at the beginning of the year.

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