German economic growth slowed in Q3 2016

German economic growth slowed in Q3 2016 to its slowest pace in an year, reminding how fragile the recovery in the Eurozone might be in a time of increasing uncertainty. The GDP of Germany expanded by 0.2% on a quarterly basis, according to seasonally adjusted data of the statistics office Destatis. This is below the expectations of economists for an increase of 0.3% and below the growth of 0.4% in the second quarter.

The year-on-year growth during the period from July to September was 1.7%.

The fate of the largest economy in the Eurozone is crucial to recovery in the 19-nation currency union. Later today Eurostat data on growth in the Eurozone are expected to show mediocre levels of growth.

European Central Bank (ECB) in less than four weeks will provide an overview of its program of incentives. Then the institution will most likely will consider the growing wave of populist criticism of international trade agreements.

The expansion in Germany in the last quarter was driven mainly by domestic demand, both private and government spending increased. Growth outweighs weaker global growth, with exports slightly declined. The investments in equipment decreased, while construction grew.

Bundesbank has already indicated that the economy has slowed in the summer months, but this may be temporary. The business confidence rose to record their highest levels in more than two years, and unemployment fell to a record low.

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