Exports, consumer demand fuel German growth

Strong exports and consumer demand helped the German economy, Europe's biggest, steer clear of recession in the first three months of this year, official data showed on Thursday. Confirming preliminary figures released earlier this month, the federal statistics office Destatis calculated that German gross domestic product (GDP) expanded by 0.5 percent in the period from January to March on a quarterly basis. As the German economy had contracted by 0.2 percent in the last three months of 2011, the first-quarter data mean that Europe's powerhouse economy managed to dodge a recession, which is defined as two consecutive quarters of negative growth. Providing a breakdown of the different GDP components, Destatis calculated that consumer spending grew by 0.4 percent on a quarterly basis in the period from January to March. Government spending edged 0.2 percent higher, while gross capital formation -- a broad measure of investment -- contracted by 3.3 percent, with investment in machinery and equipment down 0.8 percent and construction investment falling by 1.3 percent, the statisticians calculated. At the same time, exports grew by 1.7 percent quarter-on-quarter, after contracting by 1.5 percent in the previous three months, while imports stagnated, the data showed. The GDP data confirm the resilience of the German economy to the long-running eurozone debt crisis. Nevertheless, the Bundesbank warned in its May monthly report, released on Wednesday, that the "surprisingly good GDP data" for the first quarter "overstate the current underlying cyclical trend and cannot be extrapolated onto the following quarters."