Germany's economic growth slowed in the first quarter as a decline in government consumption spending and the country's foreign trade balance from the previous quarter weighed on GDP.
The country's GDP grew 0.3% in the first quarter after seasonal and calendar adjustments, following a 0.6% expansion in the fourth quarter of 2017, in line with a preliminary estimate, the country's Federal Statistics Office said.
Domestic demand had a positive effect on the economy as fixed capital formation increased significantly at the start of the year. Gross fixed capital formation in machinery and equipment rose 1.2% from the previous quarter and increased 2.1% in construction. Final consumption expenditure of households increased 0.4% in the quarter after a 0.1% rise in the prior quarter.
GDP growth was negatively affected by a 0.5% decrease in government consumption spending, the first decline in almost five years. The country's foreign trade balance had a downward effect of 0.1 percentage point on economic growth as total exports fell 1.0% and imports decreased 1.1% from the previous quarter.
Germany's economy grew 2.3% in the first quarter year over year, down from a 2.9% year-over-year increase in the fourth quarter of 2017.
The German economy should rebound later this year as one-time factors affecting the first quarter fade, but the rebound could be delayed due to the continuing decline in confidence indicators, higher oil prices and escalating trade tensions, said Carsten Brzeski, chief economist at ING Germany.
