2018.08.1408:46:00UTC+00German Q2 GDP Growth Improves On Domestic Demand

Germany's economic growth exceeded expectations in the second quarter on domestic demand and optimism among financial market experts strengthened notably despite escalating trade tensions between the U.S. and China.

Separately, Eurozone growth for the second quarter was revised up from its initial estimate.

The largest euro area economy grew 0.5 percent sequentially, following the 0.4 percent increase in the first quarter, Destatis reported Tuesday. The growth rate was expected to remain unchanged at 0.4 percent.

On a yearly basis, gross domestic product advanced at a faster pace of 2.3 percent after expanding 1.4 percent a quarter ago. Meanwhile, the calendar-adjusted GDP growth slowed slightly to 2 percent from 2.1 percent.

In the second half of the year, the economy is unlikely to grow more strongly, although the risks posed by the Turkish crisis will remain limited, Joerg Kraemer, an analyst at Commerzbank, said.

Further, the overall euro area economy expanded more than initially estimated in the second quarter, according to the latest flash estimate from Eurostat on Tuesday.

GDP climbed 0.4 percent sequentially, the same pace of increase as seen in the first quarter, but revised up from the initial estimate of 0.3 percent.

On a yearly basis, GDP growth eased less-than-estimated to 2.2 percent from 2.5 percent a quarter ago. The second quarter rate was revised up from 2.1 percent.

Positive contributions to German GDP growth came from domestic demand, Destatis said. Final consumption expenditure of both households and general government increased. Capital formation also grew.

According to provisional calculations, the price-adjusted development of foreign trade was characterized by increasing exports and an even stronger rise in imports, Destatis said.