Welcome Boost for German Economy

14 February 2007

WIESBADEN: Increases in exports and consumer spending gave an unexpected boost to the German economy during the fourth quarter of 2006. The Federal Statistics Office says the country's economy grew 0.9% over the previous quarter, while GDP rose 2.7% in 2006 instead of the 2.5% estimated last month.

German company investment in plants and machinery climbed 7.3% in 2006 from a year earlier, exports jumped 13.7% and imports rose 16.5%. Consumer spending, which accounts for about two thirds of GDP, advanced 0.6% last year.

Consumers spent more in Q4 to beat a sales tax rise which came into affect January 1.

Says Deutsche Bank economist Stefan Bielmeier: "Consumer spending probably significantly added to expansion in the fourth quarter."

Data sourced from Bloomberg.com (Germany); additional content by WARC staff