Exports, investments drive German growth in first quarter

BERLIN: The German economy increased its pace of growth to 0.6 percent in the first quarter of 2017 helped by strong exports, increased investments in machinery and buildings as well as solid spending by households and the state, data showed on Tuesday.

Confirming a preliminary reading for growth, the Federal Statistics Office said exports rose 1.3 percent on the quarter and imports edged up 0.4 percent, meaning net trade added 0.4 percentage points to gross domestic product (GDP) growth.

Investment in construction jumped 2.3 percent in the first quarter, the strongest increase in three years. This added 0.2 percentage points to growth. A growing population, increased job security and record-low interest rates are fuelling a property boom in Europe's biggest economy.

Investment in machinery and equipment rose 1.2 percent, adding 0.1 percentage points to the GDP growth rate, in a sign that companies are pushing ahead with investments despite political risks clouding the growth outlook.

Household spending edged up 0.3 percent on the quarter, adding 0.2 percentage points to GDP in the three months through March. German consumers are benefiting from record-high employment, rising real wages and low borrowing costs.

State spending rose 0.4 percent, contributing 0.1 percentage points to growth. German authorities are spending billions of euros on accommodating and integrating more than one million refugees who have arrived since the start of 2015, many from war zones such as Syria and Iraq.

The Federal Statistics Office also confirmed the quarterly growth rate of 0.4 percent for the final three months of 2016.