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Domestic demand drives German Q3 growth

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Staff writer ▼ | November 25, 2015
A rise in German private consumption and higher state spending on refugees more than compensated for weakness in foreign trade, helping Europe's biggest economy to grow at a modest, albeit slower pace in Q3.
Germany factory
GDP in Germany   The Federal Statistics Office
The Federal Statistics Office confirmed an earlier flash estimate showing seasonally adjusted gross domestic product (GDP) grew by 0.3% in the quarter between July and September. The German economy had expanded by 0.4% between April and June.

Private consumption rose 0.6% in the third quarter, while state spending jumped 1.3% - the biggest rise since early 2009. Overall, domestic demand added 0.7 percentage points to GDP.

On the downside, exports climbed at a slower pace than imports as demand from China and emerging markets weakened. Net foreign trade thus subtracted 0.4 percentage points from GDP - the weakest contribution for two years.

German business confidence bounced back in November as Europe's top economy shrugged off global uncertainty and the deadly jihadist assault in Paris, a leading economic think tank said.

The Ifo institute's business climate index rose to 109 points in November from 108.2 points in October, Ifo said in a statement, surprising analysts who had expected another dip to 108.1.

The sub-index measuring current business climbed to 113.4 points while the outlook sub-index rose for the third consecutive month to 104.7 points, it said.

In the key manufacturing sector, the upbeat outlook reached the highest level since March, indicating that production "will be ramped up in the months ahead".

A sub-index for the automotive sector continued to rise despite the emissions scandal at Volkswagen, Ifo added.