Surging exports and a return to growth in consumer spending powered the German economy to record expansion in the second quarter, producing a broad-based recovery that put Europe's largest economy ahead of its peers. The 2.2 percent increase in gross domestic product (GDP) was the fastest quarterly growth rate seen in reunified Germany, the Federal Statistics Office said on Tuesday.
Consumer spending grew over the quarter for the first time in a year. The return to growth in private consumption suggested the economy could keep expanding in the second half of the year even if the expansion in exports fades, as economists widely expect. Private consumption grew by 0.6 percent on the quarter.
The resumption of growth in private spending followed criticism by some countries - including France - that Germany has not done enough to stimulate domestic demand, from which its peers' exports could benefit. France grew by just 0.6 percent in the second quarter and last week the French government cut its 2011 growth forecast to 2 percent.
The Greek economy contracted sharply in the April-June period. In New York, the European Union's economic and monetary affairs commissioner, Olli Rehn, said the bloc was seeing a robust but uneven recovery. A double-dip recession in the United States would hurt the euro zone, he added.
Recent data have suggested a faltering US recovery with figures on Tuesday showing sales of previously owned homes took a record drop in July to their lowest pace in 15 years, suggesting further loss of momentum.
Exports grew 8.2 percent from the prior quarter. Germany accounts for over a quarter of economic output in the eurozone, where industrial orders rose by 2.5 percent on the month in June, slightly more than expected.
Its second quarter expansion saw it accelerate away from other eurozone countries, which do not enjoy its export engine. Germany's strong second-quarter performance led Germany's central bank, the Bundesbank, to raise its full-year growth forecast for the economy to 3 percent last week from 2 percent previously.
Reflecting the woes of some of Germany's other European peers, Martin Weale, a new Bank of England policymaker, said in a newspaper interview on Tuesday that Britain faced some risk of sliding back into recession.
Nonetheless, German growth will likely slow from here. Construction, recovering after a harsh winter, added 0.5 percentage points to GDP in the April-June period.
Highlighting expectations for growth to slow a little, a Reuters poll of 42 economists pointed to a dip in the Ifo economic institute's business climate index - due for release on Wednesday - to 105.7 in August from 106.2 in July. Germany's economic strength has been reflected in the performance of its leading businesses. Of the 30 companies in the blue chip DAX index, 23 beat market expectations with their earnings in the quarter to end-June and 12 hiked their outlooks.
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