Germany's GDP Growth Slows In Q1

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'Just a blip' - German growth slows in first quarter on weak trade

German economic growth slowed slightly more than expected in the first quarter of the year due to weak trade, data showed on Tuesday, but analysts called it a blip and predicted Europe's biggest economy would shift into a higher gear again.

However, the powerhouse German economy grew more slowly than previously thought, expanding by 0.3 percent - or half the pace of the prior three months. The GDP growth slowed down sharply by 0.6 percent to 0.3 percent, as compared with consensus expectations of 0.4 percent. He pointed to continued strong foreign demand and vibrant domestic activity due to record employment and rising wages.

Economists said that weak exports signal that the stronger euro - which has gained about 8% versus the greenback in the past 12 months - and the US -led push towards greater protectionism is already leaving its marks on the export-dependent German economy.

The statistics office said positive contributions in the first quarter came mainly from domestic demand while trade was weak. The Federal Statistics Office indicated that construction investments in particular "increased strongly" in the March quarter.

German economic growth decelerated unexpectedly in the first quarter of this year on a sequential basis.

While a pronounced slowdown had been expected, the outcome fell short of the U.S.'s growth rate of 2.3% in the same period. For 2018 as a whole, the government forecasts 2.3 percent growth. "Based on past experience, we expect the dip in growth to continue until the turn of the year", added Commerzbank.

"In all, we still see German GDP rising by 2.5 percent this year as a whole and the renewed strength of the euro zone's largest economy will encourage the European Central Bank to signal this summer that asset purchases will not last into 2019", she added. The office will release more detailed GDP results on 24 May.

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