German economic growth eased further in the second quarter of 2007 on lower building investment and a decline in inventories, the German central bank said Monday in its July monthly bulletin.
"Economic growth may not have proved as high as at the start of the year," the Bundesbank said. Real gross domestic product rose 0.5% in the first three month of the year, after gaining 1.0% in the fourth quarter of 2006, official data shows. The Federal Statistics Office is due to publish second- quarter GDP data Aug. 14. Growth forecasts vary widely, but many private sector economists predict a quarterly growth rate of 0.5%. Net trade likely contributed positively to growth in April-June, and private consumption - the Achilles heel of Germany's economic upswing - has "noticeably recovered," the Bundesbank said. Household spending plummeted in the first three months of 2007 on a value-added tax hike in January, to 19% from 16%. There has also been an expected, "technical" reaction in building investment, following the mild winter months, Bundesbank said. And "the previously positive influence of inventories should have significantly diminished," it added. In the first quarter, stocks contributed a massive 2.2 percentage points to GDP growth. Germany's economic showing is important for the euro zone, as the country accounts for about 30% of the area's GDP. |
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