The German economy grew strongly in the second quarter raising hopes that the eurozone has come out of recession. Figures just released have shown German gross domestic product (GDP) rose 0.7% in the quarter, slightly ahead of forecasts.
New figures from France showed its economy grew 0.5%, also stronger than expected, in the second quarter. More figures will be released later on Wednesday and are expected to show it back in growth for the first time in six quarters.
German GDP enjoyed its largest expansion in more than a year, driven largely by domestic private and public consumption.
Carsten Brzeski, an economist at ING, said the figures marked an impressive comeback for Germany, which saw its economy stagnate at the start of the year.
“The biggest domestic challenge remains weak investment,” he said.
“Despite very favourable financing conditions and [the] strong international positions of many German companies, domestic investment has been sluggish for a longer while.”Andreas Scheurle from Dekabank said the eurozone been hauled out of recession and Germany had done the lion’s share of that.
“It was made possible by our generous consumers who have again spent more money but the state has also dug deeper into its pockets,” he said.
“But this rhythm can’t be maintained – growth will become more modest and in second half of the year we should see plus 0.3-0.4%.”
The French national statistics agency, Insee, said France’s GDP growth in the second quarter had been driven by a rebound in exports, domestic household demand and public spending.
The April-to-June growth was the strongest quarterly growth since early 2011 when the eurozone was plunged into its sovereign debt crisis.
The French economy has been flat for the past two years, shrinking 0.2% in each of the previous two quarters.
French Finance Minister Pierre Moscovici said Wednesday’s figure “amplifies the encouraging signs of recovery”.