Germany Expects Economic Growth to Slow Down in the Second Quarter

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Germany Expects Economic Growth to Slow Down in the Second QuarterEconomic growth in Germany will decline in the second quarter after favorable weather helped it record impressive growth in the first quarter of 2014, reported the Finance Ministry through its monthly report released on Tuesday

Current data shows Germany had “recorded a very strong” growth in the first three months of 2014, reported the Ministry, attributing construction activity and factory expansion for much of the growth.

“Due to the weather-related surge in economic activity in the first quarter, the seasonally-adjusted figure for the following quarter will be weaker,” the ministry said. “But this technical effect should not be interpreted as a sign the economic pace slowing,” the ministry said.

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It cited optimism and positive economic data as the reason why the future points to accelerating economic growth. Recent reports have shown that industrial output and orders have risen, while private sector is picking up. While the optimism bubble may have been pricked by the Crimea tensions, it still remains upwardly-looking.

The ministry expects the economy to grow by 1.8 percent in 2014 largely due to increase in household spending as the strong labor market benefits consumers, moderate inflation, low interest rates that turn away savers and decent wages. A Reuters survey of economists expects the economy to expand by 0.6 percent in the first quarter and 0.4 percent in the next three months from April.

The government forecasts inflation to grow by 1.4 percent in 2014 and 1.9 percent in 2015. It said that there are “no discernible risks”.

Germany’s tax collections in the first three months of 2014 grew 3.7 percent to 140 billion euros, with the figures rising 7.2 percent to 55.36 billion euros in March due to sales tax and income tax. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

To contact the reporter of this story; Jonathan Millet at john@forexminute.com