Germany restored its position as Europe’s economic powerhouse last quarter as domestic spending surged and trade contributed to growth.
GDP in the region’s largest economy expanded 0.7 percent in the three months through December, the Federal Statistics Office said yesterday, confirming a Feb. 13 estimate.
Private consumption climbed 0.8 percent, capital investment rose 1.2 percent and exports jumped 1.3 percent.
“Powerful trickle-down effects from a lower oil price and a weaker euro exchange rate continued to lift the German economy,” said Andreas Rees, an economist at UniCredit SpA in Munich. “It is hard not to be reasonably optimistic in Germany these days.”
Plunging energy costs have been described by Bundesbank President Jens Weidmann as a mini-stimulus that puts more money in consumers’ pockets. The decline has also contributed to a negative inflation rate in Germany and the eurozone that prompted the European Central Bank (ECB) to announce quantitative easing, weakening the euro and making German exports more competitive.
Private consumption added 0.4 percentage point to GDP last quarter and net trade added 0.2 percentage point. Capital investment added 0.2 percentage point, driven entirely by construction. Inventories subtracted 0.2 percentage point.
The Bundesbank last month said that the German economy had overcome the “weak phase” it hit early last year as lower oil prices and higher salaries bolster consumption. Real wages increased 1.6 percent last year, the most since data collection started in 2008.
Germany’s economic resurgence contrasts with France, which barely grew in the three months through December, and Italy, which stagnated after two consecutive quarters of contraction.
The Spanish economy, the fourth largest in the eurozone, expanded at the fastest pace in seven years in the fourth quarter, with GDP rising 0.7 percent.
The eurozone economy expanded 0.3 percent in the October-December period. While the region is still recovering from its longest-ever recession, growth prospects are clouded by Greece, where a newly elected anti-austerity government is struggling to strike a financing deal with its European counterparts that would prevent a default.
In addition, ECB President Mario Draghi has warned of the risk of a deflationary spiral of falling consumer prices and households postponing spending in the currency bloc. To avert that scenario, he unveiled a 1.1 trillion euro (US$1.3 trillion) bond-buying program last month.
The risks for the region’s economy “remain on the downside, but should have diminished,” Draghi said at a Jan. 22 press conference after the announcement.
BUSINESS UPDATE: The iPhone assembler said operations outlook is expected to show quarter-on-quarter and year-on-year growth for the second quarter Hon Hai Precision Industry Co (鴻海精密) yesterday reported strong growth in sales last month, potentially raising expectations for iPhone sales while artificial intelligence (AI)-related business booms. The company, which assembles the majority of Apple Inc’s smartphones, reported a 19.03 percent rise in monthly sales to NT$510.9 billion (US$15.78 billion), from NT$429.22 billion in the same period last year. On a monthly basis, sales rose 14.16 percent, it said. The company in a statement said that last month’s revenue was a record-breaking April performance. Hon Hai, known also as Foxconn Technology Group (富士康科技集團), assembles most iPhones, but the company is diversifying its business to
Apple Inc has been developing a homegrown chip to run artificial intelligence (AI) tools in data centers, although it is unclear if the semiconductor would ever be deployed, the Wall Street Journal reported on Monday. The effort would build on Apple’s previous efforts to make in-house chips, which run in its iPhones, Macs and other devices, according to the Journal, which cited unidentified people familiar with the matter. The server project is code-named ACDC (Apple Chips in Data Center) within the company, aiming to utilize Apple’s expertise in chip design for the company’s server infrastructure, the newspaper said. While this initiative has been
GlobalWafers Co (環球晶圓), the world’s No. 3 silicon wafer supplier, yesterday said that revenue would rise moderately in the second half of this year, driven primarily by robust demand for advanced wafers used in high-bandwidth memory (HBM) chips, a key component of artificial intelligence (AI) technology. “The first quarter is the lowest point of this cycle. The second half will be better than the first for the whole semiconductor industry and for GlobalWafers,” chairwoman Doris Hsu (徐秀蘭) said during an online investors’ conference. “HBM would definitely be the key growth driver in the second half,” Hsu said. “That is our big hope
The consumer price index (CPI) last month eased to 1.95 percent, below the central bank’s 2 percent target, as food and entertainment cost increases decelerated, helped by stable egg prices, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday. The slowdown bucked predictions by policymakers and academics that inflationary pressures would build up following double-digit electricity rate hikes on April 1. “The latest CPI data came after the cost of eating out and rent grew moderately amid mixed international raw material prices,” DGBAS official Tsao Chih-hung (曹志弘) told a news conference in Taipei. The central bank in March raised interest rates by