BERLIN: Germany’s robust economic upswing extended into the fourth quarter, buttressing growth in the euro area as policy makers prepare to wind down stimulus.
The confirmation of Germany’s vibrant economic vitality comes after the European Commission said the region’s expansion is more balanced than at any time since the financial crisis, and the International Monetary Fund raised its global outlook for 2018. The 19-nation bloc recorded its best performance in a decade in 2017, raising confidence among officials at the European Central Bank that a pickup in inflation will allow them to scale back asset purchases. It’s a pretty healthy end of the year,” said Jennifer McKeown, chief European economist at Capital Economics Ltd. in London. “Going into this year, we should see consumer-spending growth pick up and continue to drive the economy.” Metal workers and engineers across Germany won landmark wage deals this month that may see 3.9 million employees getting average annual pay raises of more than 3 percent for the next two years.
Bundesbank President Jens Weidmann said last week the agreement confirms inflationary pressures will gradually increase as the upswing continues, strengthening his push to rein in unprecedented monetary support in the euro area. The German economy is running strong, and the fact that growth slowed somewhat doesn’t really matter much,” Andreas Scheuerle, an economist at Dekabank in Frankfurt, said before the report. “Consumption continues to be a pillar of growth, supported by exports and a pickup in investments. As far as Germany is concerned, all lights are green. Gross domestic product in Europe’s largest economy increased 0.6 percent from the third quarter, the Federal Statistics Office in Wiesbaden said on Wednesday. That’s in line with the median estimate in a Bloomberg survey. The economy expanded 2.9 percent from a year earlier when adjusted for calendar days.
