BERLIN, Aug. 25 (Xinhua) -- German growth held steady in the second quarter of 2017, data released on Friday by the Federal Statistical Office (Statistisches Bundesamt) confirmed.
The report was published shortly before the respected Ifo Institute for Economic Research's business sentiment index revealed that the country's firms remained very optimistic for their future earnings.
The Federal Statistical Office in Wiesbaden re-affirmed an earlier forecast for Gross Domestic Product (GDP) growth of 0.6 percent in Q2 and corrected its earlier estimate for Q1 growth upward to 0.7 percent.
Growth between April and June was driven by a jump in domestic spending by traditionally frugal Germans. Private households increased their consumption significantly by 0.8 percent, compared a 0.6 percent rise in public consumption.
In contrast, the Eurozone's largest economy received "mixed" signals for foreign demand according to the government statisticians. While exports of goods and services in Q2 rose by 0.7 compared to Q1, imports grew at a much faster rate of 1.7 percent.
Germany's controversial current account surplus, the largest in the world in 2016, shrunk as a consequence. U.S. president Donald Trump and the International Monetary Fund, amongst others, have criticized the country's high savings rate and export driven growth as a source of global imbalances.
At the same time, the Munich-based Ifo institute closely-watched regular business sentiment index fell slightly from 116.0 to 115.9 points for the first time in 2017. Ifo president Prof. Clemens Fuest noted in a statement that the decline was largely due to a downgrading of assessments of the current economic situation and that business sentiment remained highly favourable.
Fuest wrote that the signs still pointed towards future growth as expectations for the coming half year rose to the highest level since 2014.
Notably, the string of "dieselgate" and "cartel" scandals which have struck German carmakers did not appear to have had a measurable effect on the automotive industry's sentiment.
However, retail sector firms, and above all car dealerships, surveyed by Ifo downgraded their view of the contemporary business environment significantly.
In contrast, the construction sector continued to go from strength to strength as Germany's housing shortage tightened, reaching new record levels for firms' assessment of their current situation, as well as their future expectations.
Speaking in the "Financial Times", Carsten Brzeski, chief economist for Germany and Austria at the bank ING, described the figures released on Friday as an "almost breath-taking" proof of German economic momentum. "...(T)oday's Ifo index sends a clear signal that the German economy is powering ahead," he said.
