German economy expands in Q1

The German economy grew faster in the first quarter of 2014 than it has in three years, statistical data revealed on Thursday, but growth in the euro zone badly fell short of expectations.

Driven by robust spending at home, Europe's largest economy expanded by 0.8 percent, double that of the previous quarter, in which gross domestic product (GDP) rose by 0.4 percent, Germany's federal statistical office Destatis said in a statement.

The good news drew cautious laudations from Germany's finance minister, Wolfgang Schäuble, who spoke of a "relatively good situation."

"It all points toward a broad upswing," Schäuble said.

Euro zone growth disappoints

Quarterly data from the European statistics agency, Eurostat, fell sorely short of economists' predictions for the 18-member bloc, signaling that weaker members were still struggling to get back on their feet after weathering the sovereign debt crisis.

Overall GDP in the euro zone rose by 0.2 percent, Eurostat said.

"Today's figure is a major disappointment, as it suggests that the euro zone is still far away from reaching the escape velocity required for a sustainable recovery," said Peter Vanden, chief euro zone economist at ING.

The positive news out of Germany contrasted stagnation in France and contraction in Italy, the Netherlands and Finland. Spain logged growth of 0.4 percent, while Portugal in Cyprus also watched their respective economies shrink by 0.7 percent.

Bloc buoyed by Germany

In Germany, preliminary calculations showed exports were down at the beginning of the year but imports had risen over the fourth quarter of 2013. An unseasonably mild winter was also a factor as it positively affected key sectors such as construction.

"The trend in investment was also positive, with a sharp increase in investment in both construction and equipment," Destatis said. "By contrast, net foreign trade weighed on growth."

cjc/hg (Reuters, AFP, dpa)