German GDP grows less than expected in fourth quarter 2016

The German economy grew less than expected in the fourth quarter, according to data released by Destatis on Tuesday. Gross domestic product rose 0.4% on the previous quarter on a seasonally-adjusted basis, missing economists’ expectations of 0.5% growth.

Growth was driven by a pickup in domestic demand, as government spending rose significantly from the third quarter, while construction investments were also strong.

Net trade was a drag however, as imports grew more than exports.For 2016 as a whole, the growth rate was confirmed at 1.9%, marking the strongest rate in half a decade.Capital Economics said:

“The smaller-than-expected expansion in German GDP in Q4 increases the risk that Eurozone GDP growth will be revised down later this morning, but we still suspect that the Eurozone economy grew by 0.5% in Q4.

“Granted, today’s data show that the German economy grew by 0.4% in Q4, stronger than Q3’s downwardly-revised growth of 0.1%. We do not yet have a breakdown of German GDP in Q4, but the monthly retail sales data suggest that consumer spending contributed to the improvement.”