Germany's GDP Growth Fastest In Six Years

The German economy expanded at the fastest pace in six years in 2017, driven by domestic demand, preliminary data from Destatis showed Thursday.

Gross domestic product grew 2.2 percent in 2017 after expanding 1.9 percent in 2016. This was the fastest growth since 2011. The biggest euro area economy has expanded for the eighth year in a row.

The growth rate also exceeded the average of the last ten years by almost a percentage point. Nonetheless, growth was below economists' expectations of 2.4 percent.

GDP growth, on calendar adjustment, rose to 2.5 percent from 1.9 percent in the previous year. The statistical office has not published its fourth quarter GDP data, which is due on February 14.

Looking ahead, the same fundamentals which have supported growth in 2016 and 2017 should still be in place in 2018, Carsten Brzeski, an ING Bank economist, said.

"The only question is how much additional stimulus low interest rates, a relatively weak euro, strong domestic momentum and the recent upswing of the entire Eurozone economy can still provide to the mature cycle of the German economy," the economist added. "In our view, still a lot."

The central bank last month raised its growth projection for 2018 to 2.5 percent from 1.7 percent.

Bundesbank President Jens Weidmann said this broad-based, robust economic upswing is reaching an increasingly mature state, which means that the pace of growth is likely to slow in the medium term.

Destatis said positive contributions to growth were primarily provided by the domestic demand in 2017.

Household consumption rose 2 percent and government expenditure by 1.4 percent. At 3.0 percent, growth in gross fixed capital formation was above average in 2017.

Exports increased 4.7 percent and imports by 5.2 percent. The resulting balance of exports and imports contributed +0.2 percentage points to GDP growth.

Data showed that general government registered a surplus of EUR 38.4 billion in 2017, the fourth consecutive year with a surplus at year-end. This was equivalent to 1.2 percent of GDP.