The German economy halved its growth rate to 0.2 per cent in the third quarter despite rising private consumption and higher state spending as weak foreign trade slowed overall activity in Europe’s biggest economy.
Confirming a preliminary reading for growth, the Federal Statistics Office said on Thursday that net foreign trade subtracted 0.3 percentage points from GDP growth as exports fell by 0.4 per cent on the quarter and imports rose by 0.2 per cent.
State spending increased by 1 per cent on the quarter, contributing 0.2 percentage points to growth. Authorities are spending billions of euros on accommodating and integrating more than one million migrants who have arrived since the start of 2015, many from war zones such as Syria and Iraq.
Household spending rose by 0.4 per cent on the quarter, also adding 0.2 percentage points to GDP in the three months through September as consumers benefitted from record-high employment, rising real wages and low borrowing costs.
Investment in construction edged up 0.3 per cent in the third quarter as Germany’s growing population, increased job security and record-low interest rates fuel a property boom. But construction did not contribute to growth.
In a sign that companies are holding off investment despite the European Central Bank’s policy of cheap money, investment in plant and equipment fell by 0.6 per cent on the quarter.