Germany's Economy Slows Unexpectedly in Second Quarter

By Nina Adam Features Dow Jones Newswires

Germany's economy slowed unexpectedly in the second quarter, albeit only slightly and following a stronger-than-expected expansion at the start of the year.

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German gross domestic product grew at a quarterly clip of 0.6%, or 2.5% in annualized terms, the Federal Statistical Office said Tuesday. Economists polled by The Wall Street Journal forecast an annualized pace of 2.8%.

Europe's largest economy hence lagged behind the U.S., which expanded at an annualized pace of 2.6% in the same period, but slightly outpaced the 2.3% growth in the 19-country euro currency zone.

But, overall, Germany's economy grew solidly in the first six months of the year. Illustrating the trend, Germany's statistics body lifted its quarterly growth estimate for the first quarter to 0.7%, or an annualized pace of 2.9%, from an earlier estimate of 0.6%.

Germany's robust economy is likely to play into the hands of Chancellor Angela Merkel, who has maintained a comfortable polling lead ahead of general elections on Sep. 24.

Economists say that it is also likely to bolster expectations that the European Central Bank will begin to phase out stimulus measures next year, amid increasing signs that the region's recovery is broadening.

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Germany's statistics body said that "positive impulses" in the second quarter came from domestic demand, as spending by households and the government increased markedly.

Foreign trade, however, weighed on Germany's upswing, it said, because imports grew more strongly than exports, on a quarterly basis. A detailed GDP report is due Aug. 25.

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

(END) Dow Jones Newswires

August 15, 2017 02:50 ET (06:50 GMT)