Germany’s economic growth exceeded expectations in the second quarter on domestic demand and optimism among financial market experts strengthened notably despite escalating trade tensions between the U.S. and China.
Separately, Eurozone growth for the second quarter was revised up from its initial estimate.
The largest euro area economy grew 0.5 percent sequentially, following the 0.4 percent increase in the first quarter, Destatis reported Tuesday. The growth rate was expected to remain unchanged at 0.4 percent.
On a yearly basis, gross domestic product advanced at a faster pace of 2.3 percent after expanding 1.4 percent a quarter ago. Meanwhile, the calendar-adjusted GDP growth slowed slightly to 2 percent from 2.1 percent.
In the second half of the year, the economy is unlikely to grow more strongly, although the risks posed by the Turkish crisis will remain limited, Joerg Kraemer, an analyst at Commerzbank, said.
Further, the overall euro area economy expanded more than initially estimated in the second quarter, according to the latest flash estimate from Eurostat on Tuesday.
GDP climbed 0.4 percent sequentially, the same pace of increase as seen in the first quarter, but revised up from the initial estimate of 0.3 percent.
On a yearly basis, GDP growth eased less-than-estimated to 2.2 percent from 2.5 percent a quarter ago. The second quarter rate was revised up from 2.1 percent.
Positive contributions to German GDP growth came from domestic demand, Destatis said. Final consumption expenditure of both households and general government increased. Capital formation also grew.
According to provisional calculations, the price-adjusted development of foreign trade was characterized by increasing exports and an even stronger rise in imports, Destatis said.
Elsewhere, a survey from the Mannheim-based think tank ZEW showed that Germany’s Indicator of Economic Sentiment climbed to -13.7 in August from -24.7 in July.
The expected score was -21.3. Nonetheless, the indicator remained significantly below its long-term average of +23.0.
The current conditions index of the survey rose only 0.2 points to 72.6 in August. But the score was forecast to fall to 72.1.
The recent agreement in the trade dispute between the EU and the United States has led to a considerable rise in expectations for Germany and also, to a lesser degree, for the Eurozone, ZEW President Achim Wambach, said.
“However, the economic outlook for Germany is now significantly less favorable than it was six months ago,” Wambach added.
In the euro area, the economic sentiment index improved to -11.1 in August from -18.7 in the previous month. Still the score remained in negative zone. Meanwhile, the current situation index fell 6.2 points to 30.0.