February 23, 2017 / 7:06 AM / 5 months ago

Domestic demand drives German growth in fourth quarter

2 Min Read

BERLIN, Feb 23 (Reuters) - The German economy quadrupled its growth rate to 0.4 percent in the fourth quarter of 2016 as higher state spending, rising private consumption and construction more than offset a drag from net foreign trade, data showed on Thursday.

Confirming a preliminary reading for growth, the Federal Statistics Office said exports increased by 1.8 percent on the quarter and imports rose by 3.1 percent, meaning net foreign trade subtracted 0.4 percentage points from gross domestic product (GDP) growth.

State spending jumped 0.8 percent, contributing 0.2 percentage points to growth. German authorities are spending billions of euros on accommodating and integrating more than one million refugees who have arrived since the start of 2015, many from war zones such as Syria and Iraq.

Household spending rose by 0.3 percent on the quarter, also adding 0.2 percentage points to GDP in the three months through December. Consumers are benefitting from record-high employment, rising real wages and low borrowing costs.

Investment in construction increased by 1.6 percent in the fourth quarter, adding 0.2 percentage points to growth. Germany's growing population, increased job security and record-low interest rates are fuelling a property boom. (Reporting by Michael Nienaber; Editing by Michelle Martin)

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