German gross domestic product growth was powered by exports in the second quarter of this year as private and public spending stagnated and capital investment declined, the Federal Statistics Office said on Tuesday. The Office confirmed Europe's biggest economy expanded by an adjusted 0.5 percent from the previous quarter and by an unadjusted 2.0 percent from the same quarter a year earlier. The data was in line with a preliminary report published earlier this month. The Office also said the budget deficit was 4.0 percent of GDP in the first half, above the EU's three percent ceiling. Foreign trade contributed half a percentage point to quarterly growth as exports increased 3.2 percent, outpacing a 2.2 percent gain in imports, the Office said. Public spending added a tenth of a point to Germany's quarterly expansion, while gross capital investment shaved off two tenths of a point, it added.
Lothar Hessler, an economist at HSBC Trinkaus, said the contribution to growth from exports would probably weaken in the second half and that consumer spending was unlikely to increase without a rise in investment. "I see exports making little contribution to growth in the third quarter and growth in that period is likely to slow to 0.3 percent," Hessler said. "The standard sequence for an economic recovery (in Germany) is that rising exports boost investment which in turn fuels consumer spending. That isn't happening," he added. Private consumption posted its first increase in the second quarter since the first three months of 2003, rising by 0.1 percent. Public consumption gained 0.3 percent and gross capital investment fell 1.0 percent.///