Germany economy grew 0.7 pct in 3rd quarter

BERLIN – Economic growth in Germany cooled in the third quarter, slipping back to a still-healthy and broader-based 0.7 percent following a spectacular boom in the spring, official figures showed Friday.

The quarterly figure for Europe's biggest economy compared with a huge 2.3 percent advance in the April-June period — that was revised upward Friday from the initial reading of 2.2 percent. The first-quarter figure was also revised up to 0.6 percent from 0.5 percent.

The third-quarter growth was in line with forecasts for growth of 0.7 or 0.8 percent.

Germany's economy has made an impressive comeback after contracting sharply last year — led by exports and now helped by signs of healthier domestic demand.

The Federal Statistical Office said that "both domestic and foreign demand made a positive contribution to growth" in the third quarter, with the expansion "based equally" on household and government consumption, company investment and foreign trade.

Analysts said the figures encouraged hopes that the German economic recovery is becoming more sustainable.

UniCredit analyst Andreas Rees said there is "no — repeat no — reason for being disappointed" by the third-quarter figure.

He noted that "the upswing has been getting broader in recent months" with both consumer spending and investment in machinery and equipment contributing to growth.

The massive second-quarter growth was fueled in part by a catch-up in construction work after a hard winter, while exports and investment also contributed.

"The signs of a profound change in the 'quality' of growth have become unmistakable," he said.

And Carsten Brzeski, an economist at ING in Brussels, said the third-quarter demonstrate that the German recovery "is much more than a simple statistical quirk: the German economy is a good way toward a self-sustained recovery."

Friday's data suggest that the German economy is outperforming the government's predictions.

Gross domestic product was up 3.9 percent in the third quarter compared with the same period last year.

The government expects full-year growth of 3.4 percent in 2010, cooling to 1.8 percent in 2011.

Economy Minister Rainer Bruederle said the German economy continued its "dynamic upswing" in the third quarter and the government's full-year forecast was "impressively confirmed" by the new figures.

This week, the government's independent panel of economic advisers issued an even more optimistic forecast of 3.7 percent this year and 2.2 percent in 2011.

The economy contracted by 4.7 percent last year, by far the worst performance since World War II, as global economic woes weighed on German exports.

Third-quarter growth figures for the 16-nation eurozone are due later Friday.