German economy grows 0.4% in second quarter

Growth of the German economy, Europe's biggest, picked up marginally in the second quarter of 2015, driven by the weaker euro and healthy consumer spending, official data showed on Friday.

German gross domestic product (GDP) expanded by 0.4 percent in the period from April to June, up from 0.3 percent in the first quarter, the federal statistics office Destatis said in a flash estimate.

Analysts had been projecting marginally stronger growth of 0.5 percent for the second quarter.

"The German economy continued along its positive growth path," the statisticians said.

"Positive impulses came primarily from foreign trade. Exports grew a lot faster than imports thanks to the weak euro, with goods exports in particular growing strongly."

But consumer spending and government spending also increased.

Weak investment, on the other hand, weighed on growth, Destatis added.

On a 12-month basis, GDP growth stood at 1.6 percent in the second quarter compared with 1.2 percent in the first quarter, it said.

- 'Broad footing' -

"Overall, the data show that, despite the uncertainty surrounding Greece's continued membership in the euro, the German economy managed to gain some momentum in the spring," said BayernLB economist Stefan Kipar.

"The German economy is on a broad footing and is being driven by both domestic demand and positive foreign trade," he said.

And given the continued low oil prices and economic recovery in the United States and the euro area, "the outlook for coming quarters remains positive," Kipar noted.

ING DiBa economist Carsten Brzeski said that "neither Greece nor China were able to stop the German economy."

A full breakdown of the different GDP components would only be published at the end of August.

"But available monthly data... indicate that growth was driven by exports and domestic consumption," Brzeski said.

"The eurozone's economic powerhouse has successfully defied external turbulences. Despite the Greek crisis, the Chinese stock market collapse and growth slowdown fears as well as continued weakness in many eurozone countries," German growth averaged 0.4 percent in last four quarters, he said.

"Nevertheless, not all that glitters is gold," Brzeski cautioned, arguing that record low interest rates, low energy prices and the weak euro should have given the German economy an even stronger boost.

"Normally, such a cocktail of strong external steroids should have given wings to the economy. This is not the case," he said.

UniCredit economist Andreas Rees said that the German economy "remains on its fundamental upward trend."

He said that overall growth could come out at "close to two percent for 2015" after 1.6 percent in 2014.

But Commerzbank economist Joerg Kraemer was more sceptical.

"In the longer run, (stronger demand in industrialised countries) will not be able to compensate if the Chinese economy continues to cool down. We see downside risks in particular for our 2016 German growth forecast of 1.8 percent," Kraemer said.