The divergence remains, but it seems, for now, we shall have a retraction …
Germany is key to the 18-nation currency bloc’s drive to sustain a recovery from itslongest-ever recession at a time when weak price growth is pushing the European Central Bank toward adding more stimulus. The ECB next meets to set monetary policy on June 5, when it will also present revised economic forecasts through 2016.
“Apparently, the divergence between the French and German economies is widening,” saidAlexander Koch, an economist at Raiffeisen Schweiz in Zurich. “While the preconditions for solid expansion are better in Germany than in other countries, slowing fiscal consolidation and an improving labor market point to an increasing convergence and broadening in euro-zone growth.”
Growth in Germany was driven by domestic consumption by private households and the government, the statistics office said. Investment in construction and machinery also increased. External trade subtracted from growth with lower exports and higher imports than the prior quarter, the office said.