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Germany's 'Superman' Economy Expands at Record Pace (Update1)
2010-08-13 06:24:54.529 GMT
(Updates with euro reaction in fifth paragraph.)
By Christian Vits
Aug. 13 (Bloomberg) -- Germany's economy grew at the
fastest pace since the country's reunification two decades ago
in the second quarter as the global recovery boosted exports and
companies stepped up investment.
Gross domestic product, adjusted for seasonal effects, rose
2.2 percent from the first quarter, when it gained an upwardly
revised 0.5 percent, the Federal Statistics Office in Wiesbaden
said today. That's the fastest growth since records for a
reunified Germany began in 1991. Economists predicted the
economy would expand 1.3 percent, the median of 33 estimates in
a Bloomberg News survey shows.
Europe's largest economy is benefiting from a recovery in
global demand just as the euro's 10 percent decline against the
dollar this year makes its exports more competitive outside the
currency bloc. At the same time, governments across the 16-
nation euro region are cutting spending to rein in ballooning
budget deficits, threatening to slow growth in coming months.
"Superman is wearing black, red and gold this year,
Germany's national colors," said Carsten Brzeski, an economist
at ING Group in Brussels. "But at some stage he'll become Clark
Kent again. The economy can't keep growing at this rate."
The euro rose to $1.2897 at 8:10 a.m. in Frankfurt from
$1.2871 before the GDP report was released.
India, China
In annualized terms, the German economy expanded about 9
percent in the second quarter, said Andreas Scheuerle, an
economist at Dekabank in Frankfurt. That puts it on a footing
with emerging markets like China and India.
"This is a vintage quarter," Scheuerle said. "We've
never had stronger growth and we probably won't see it again."
Germany is driving the 16-nation euro area's recovery from
its worst recession since World War II. The French economy, the
region's second largest, grew 0.6 percent in the second quarter
from the first, French Finance Minister Christine Lagarde said
this morning. Italian GDP rose 0.4 percent in the period.
Euro-zone GDP probably grew 0.7 percent in the quarter
after rising 0.2 percent in the first three months of the year,
according to a Bloomberg survey of economists. Eurostat, the
European Union's statistics arm in Luxembourg, will publish that
data at 11 a.m.
Germany's economy, which contracted 4.7 percent last year,
will expand 1.9 percent this year and 1.4 percent in 2011,
according to Bundesbank forecasts published on June 11.
Exports, Investment
From a year earlier, GDP increased 3.7 percent in the
second quarter when adjusted for the number of working days.
First-quarter GDP growth was revised up from 0.2 percent.
The statistics office said exports and investment were the
main growth drivers in the second quarter. At the same time,
private and public spending made positive contributions.
Germany's Bayerische Motoren Werke AG, the world's
largest manufacturer of luxury cars, on Aug. 3 reported its
biggest profit in 2 1/2 years after demand for the new 5 Series
surged and sales advanced in China and the U.S. Infineon
Technologies AG, Europe's second-largest chipmaker, on July 28
raised its fiscal 2010 forecast for a third time on
semiconductor demand from makers of cars and consumer
electronics.
'External Stimuli'
"The German economy is driven by external stimuli and
domestic consumption is likely to remain sluggish," said Stefan
Bielmeier, chief economist at DZ Bank in Frankfurt. "Therefore,
Germany will feel the impact of weakening global demand."
Factory orders in the U.S., the world's biggest economy,
fell more than economists forecast in June, while China's
industrial output rose the least in 11 months. German investor
confidence declined for a third month in July.
German Chancellor Angela Merkel's Cabinet in June approved
levies on banks, air travel and nuclear-power plants as part of
what she called an "unprecedented" round of budget cuts,
rejecting U.S. calls to spur growth. The program, a mixture of
spending cuts and revenue-raising steps, amounts to 81.6 billion
euros ($105.1 billion) from 2011 through 2014.
"The three months through June were a vintage quarter and
even as dynamics slow in the second half of the year we'll see
growth rates above pre-crisis levels," said Andreas Scheuerle,
an economist at Dekabank in Frankfurt. "However, risks are
looming as inventories are filled, stimulus packages expire and
governments start to consolidate their finances."
For Related News and Information:
Top German stories: TOPG <GO>
Economic stories on Germany: NI GEECO BN <GO>
For German economic statistics: ECST GE <GO>
Economic stories on Germany: NI GEECO <GO>
For German economic growth forecasts: NSN L19M890YHQ0Y <GO>
Global economic forecasts: ECFC <GO>
Global economic statistics: STAT <GO>
--With assistance from Jana Randow in Frankfurt. Editors:
Matthew Brockett, Fergal O'Brien
To contact the reporter on this story:
Christian Vits in Frankfurt at +49-69-92041-341 or
cvits@bloomberg.net
To contact the editor responsible for this story:
John Fraher at +44-20-7673-2058 or jfraher@bloomberg.net
