German Growth Outpaces US and UK as Mild Weather Boosts Construction

By Nina Adam Features Dow Jones Newswires

Germany's economy accelerated in the first quarter, driven by a revival in global trade and buoyant construction activity.

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Germany's gross domestic product grew at a quarterly clip of 0.6%, or 2.4% in annualized terms, the Destatis statistics office said Friday.

This met economists' forecasts and meant Germany's economy comfortably outpaced the U.S., which expanded by 0.7% annualized in the first quarter.

The U.K., Japan, France and Italy also recorded lower growth rates than Germany. Canada is the only Group of Seven country that may record a stronger first-quarter result when it publishes its estimate in late May.

Destatis said mild winter weather contributed to a sharp rise in construction, while rising foreign demand for German goods also helped lift first-quarter growth from an annualized 1.7% in the fourth quarter of 2016. Private consumption and government spending rose slightly at the start of 2017.

Europe's largest economy is widely forecast to maintain solid growth, despite global geopolitical and economic uncertainties. The European Commission forecast on Thursday that Germany's economy would grow by 1.6% in 2017--slightly less than 2016 because of fewer working days in the year-- and 1.9% in 2018.

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Official tax revenue estimates published on Thursday suggested Germany's strong economy and labor market would deliver a EUR54.1 billion ($58.8 billion) windfall through 2021, creating scope for tax cuts.

Destatis said in a separate publication that Germany's annual inflation rate, measured by harmonized European Union standards, rose to 2.0% in April from 1.5% in March. The pickup was led by price rises in the services sector around Easter, which was celebrated in April this year rather than March, as in 2016.

Write to Nina Adam at nina.adam@wsj.com

(END) Dow Jones Newswires

May 12, 2017 02:52 ET (06:52 GMT)