German economic growth slowed in the July-September period but the upswing in Europe's largest economy appeared to be on a broader and firmer footing, pointing to solid, if unspectacular growth in coming quarters.
Gross domestic product grew 0.7 per cent in the third quarter, according to preliminary quarter-on-quarter data from the Federal Statistics Office released today. That was a sharp slowdown from the April-June period, for which growth was revised up 10 basis points to 2.3 per cent, the fastest rate in reunified Germany.
"Positive impulses came both from the domestic side as well as from abroad," the Statistics Office said in a statement. "Private and public consumption, equipment investments as well as trade contributed to the rise in GDP."
Germany suffered its biggest postwar recession in 2009 when the economy contracted by 4.7 per cent. Driven by strong exports and helped by stronger-than-usual consumer sentiment, it has emerged from the slump - leaving behind some euro zone peers.
Austerity measures to slash the deficit are squeezing economic activity in a number of European states, but Germany's economy may be more resilient to the country's swathe of budget cutbacks than others.
Output data are due from a slew of euro zone countries as well as the currency bloc as a whole later in the day, where growth is expected to have slowed to 0.4 per cent quarter on quarter from a 1 per cent increase in the second quarter.
Spain's economy stagnated in the third quarter, lagging behind the euro zone core and fuelling prospects of a prolonged period in the doldrums with robust exports overshadowed by persistently weak domestic demand.
"The quality of growth has improved. The German economy is no longer just standing on one leg - exports. Private consumption is also improving and is helping growth to be more balanced," said Andreas Rees, an economist at Unicredit.
"By the first or second quarter of 2011 we'll have reached the pre-crisis level. A few months ago no-one would have thought that would be possible," he added.
German businesses are still profiting from the rebound.
Siemens, Europe's biggest engineering company, yesterday signalled its confidence with a proposed sharp rise in dividends and a promise of profit growth driven by emerging markets.
Year-on-year, the German economy grew by 3.9 per cent in the third quarter, the data showed. This followed a revised 4.3 per cent expansion in the April-June period and beat expectations for a 3.7-per cent growth year on year.
Reuters