German economy in grand shape |
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Mon, 14 Aug 2006 09:50
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LONDON - Economies across Europe were robust with both Germany and the eurozone leading the way after it was reported that the German economy has improved by a further 0.9 percent in the second quarter with the Federal Statistics Office revising the first quarter growth to 0.7 percent, up from 0.4 percent. This has been Germany's fastest rate of economic growth in the past five years.
The report is better than expected as analysts had earlier predicted that the economy would grow by 0.8 percent. This means that the year-on-year growth rate of Europe's biggest economy has moved up to 1.8 percent. The growth rate in eurozone thus comes up to 2.3 percent in the second quarter compared to last year. Though hosting the soccer world cup has helped, many economists are not convinced that this was the main reason for such a robust growth. With economies all around Europe improving, signs are present that the European Central Bank will once again raise the main lending rate above the current 3 percent.
The ECB had earlier increased the interest rate from 2 percent to 3 percent in August and may increase it twice before the year-end. Kornelius Purps, a HVB Group fixed-income strategist, said, "The strong growth data provide tailwind for the ECB. A rate hike at the council meeting in early October is now very, very likely. Market expectations for another hike in December will intensify".
Meanwhile, Italy too succeeded in beating the analysts forecast by posting a better than expected growth in GDP by 0.5 percent. France posted an impressive 1.2 percent economic growth, it’s fastest since 2000.
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Q4 economic growth stunted in Germany 