Germany’s economy slowed more than forecast at the start of the year as domestic demand struggled to make up for a drag from trade, while France grew the most in almost two years.
German gross domestic product rose 0.3 per cent in the first quarter after expanding 0.7 per cent in the previous three months, the Federal Statistics Office in Wiesbaden said today (Wednesday).
The French economy grew 0.6 per cent after stagnating in the October-December period. Analysts surveyed by Bloomberg predicted growth of 0.5 per cent and 0.4 per cent, respectively.
“Taken together with stellar growth in the fourth quarter, the German economy is doing quite alright,” said Ralph Solveen, head of economic research at Commerzbank AG and one of two economists in Bloomberg’s survey to correctly predict the growth rate.
Nevertheless, “forecasts in recent months may have been a bit on the optimistic side,” he said.
Germany, Europe’s biggest economy, is still on track to outperform the euro area over the next two years as countries such as France and Italy lag behind on the reforms needed to sustain the recovery, and Greece weighs on confidence.
The euro-area economy probably expanded 0.4 per cent in the first quarter after growth of 0.3 per cent in the fourth, according to a separate survey. That report is due from the European Union’s statistics office in Luxembourg at 11am today.
The Italian economy grew 0.3 per cent in the first three months of the year, while Dutch growth slowed to 0.4 per cent. Slovakia reported an expansion of 3.1 per cent from the previous year.
Spain, where the government has liberalised the labour market and tackled the legacy of bad debt held by banks since being hit by the crisis, recorded its fastest growth in seven years in the quarter. The economy expanded 0.9 per cent and is set to grow almost twice the speed of the euro area this year.
The European Commission raised its outlook for the region on 5 May, predicting gross domestic product will increase 1.5 per cent in 2015.
News by Bloomberg, edited by ESM
