German Economy Stumbles In First Quarter

Germany recorded GDP growth in the first quarter of just 0.3%, coming in well below the expectations of economists, while Greece has returned to recession.

According to the latest figures from the German federal statistics office, Destatis, quarter-on-quarter growth in the country slowed from 0.7% in the final quarter of 2014.

Destatis said what growth there was between January and March was largely due to domestic demand and that an increase in imports outpaced export growth, which increased only slightly.

Germany has traditionally been an export-focused economy but weaker eurozone trading partners and lower demand from China have hit overseas trade levels.

As expected, it was also confirmed that Greece had returned to recession with growth in the second quarter measured at -0.2%.

It intensifies pressure on the country to secure a deal with creditors to unlock €7.2bn in bailout funds.

In stark contrast to Germany, France beat analysts' forecasts for the first quarter and also outpaced German GDP growth.

France posted its fastest economic growth rate in two years for the first three months of 2015, with growth of 0.6% beating market expectations of 0.4%.

The French government has predicted its economy would grow by at least 1% this year after an anaemic 0.2% growth in 2014.

This most recent data indicates that this forecast for 2015 could actually be on the conservative side.

France's improved data was supported by a more confident consumer as well as higher corporate investment and industrial output.

Within the wider eurozone, Spain reported even stronger growth than France during the period of 0.9%.

The Spanish government has raised its 2015 growth target to 2.9% and is insisting its 24% unemployment rate will fall more quickly than previously anticipated.

Over the last quarter euro area countries have benefited from the fall in global oil prices.

Lower energy and food bills have helped consumers and a weak euro has helped exporters.

But with the price of oil markedly higher than at the turn of the year, economic growth may be harder to achieve going forward.