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. Last Updated: 07/27/2016

German GDP Shows Slow Rise

COMBINED REPORTS


BONN, Germany -- Germany's economic recovery quickened in the second quarter of this year, official data showed Wednesday, but economists said growth was still led mainly by exports and domestic investment remained weak.


The nation's gross domestic product expanded 1 percent in the second quarter compared to the first three months of the year and grew 2.9 percent from the same period a year earlier, the Federal Statistics Office said.


The figures were broadly in line with market expectations. The Deutsche mark gained slightly against the dollar on the report, but it slipped again after a Bundesbank official said he saw no urgent need to act against inflation, indicating the central bank was holding steady on interest rates.


The statistics office also revised data to show that economic growth was slower in the first quarter than previously reported. It said GDP rose 1.1 percent from a year earlier, revised down from 1.4 percent as reported in June.


Speaking to parliament on the second day of a budget debate, Chancellor Helmut Kohl said Germany would "with great probability" reach its growth target of 2.5 percent this year and see further improvement next year.


Economics Minister Guenter Rexrodt saw prospects for an improvement in the domestic economy. But he said capital investment still lagged the pattern of past recoveries and must increase sharply in order to create jobs. The economy grew 2 percent in the first half of 1997, he said.


"The German economy needs more spirited investment and innovation and less griping and complaining," Rexrodt said in a statement.


Despite pressure on prices from imports, inflation remains moderate because of falling labor costs, which could begin to boost the creation of jobs, Rexrodt said.


Kohl also told parliament Wednesday that Germany's record-high unemployment should begin to drop this winter. (P)