BERLIN: German economic growth slowed more than expected in the third quarter of 2016 as exports fell following Britain’s vote to leave the European Union, but Europe’s largest economy looked set for a fourth-quarter rebound.
The economy grew by 0.2 percent on the quarter between July and September after expanding by 0.4 percent in the three months to June, Germany’s Federal Statistics Office said.
That was weaker than the consensus forecast in a Reuters poll for 0.3 percent growth.
“One had expected a little more economic activity in the third quarter. But the signs for the final quarter are looking good,” DekaBank analyst Andreas Scheuerle said. Global demand for German goods was expected to pick up again, he said. The statistics Office said German growth was slowed down by foreign trade in the third quarter as exports fell slightly on the quarter and imports rose marginally.
“Positive impulses on the quarter came mainly from domestic demand. Both household and state spending managed to increase further,” it said.
Private consumption has overtaken trade as the most important growth driver in Germany, with unemployment at its lowest ever, higher real wages and low interest rates pushing households to spend more.
Spending on construction rose slightly and fell in machinery and equipment edged down, the statistics office said. The government has spent more on roads and is spending more than 20 billion euros ($22 billion) on housing and helping an influx of more than a million migrants over the past 18 months.
Unadjusted data showed the economy expanded by 1.5 percent on the year in the third quarter, also missing the Reuters consensus forecast for 1.8 percent growth. On a working-day adjusted basis, the annual GDP growth rate was 1.7 percent.
The government forecasts growth of 1.8 percent, the highest in five years, in 2016 and a slowdown to 1.4 percent in 2017.
“Brexit meets solid domestic economy. This is probably the best description of the German economic performance during the third quarter,” ING Bank economist Carsten Brzeski said.
The domestic economy should be strong enough to ensure solid, though perhaps waning, support in coming quarters, he said.
“However, if Germany’s single most important trading partner, the U.S., really moves towards more protectionism, this would definitely leave its mark on German growth,” he said.
German exporters are struggling amid a global economic environment characterised by uncertainty following the Brexit decision and Donald Trump winning the U.S. presidential election, the Economy Ministry said last week.
The United States accounts for roughly 10 percent of Germany’s sales abroad. In 2015, German companies sold gods worth 114 billion euros to the U.S., mainly vehicles, machines and chemical products.
