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Last Updated: Tuesday, 15 November 2005, 12:30 GMT
German growth boosted by exports
Volkswagen workers put finishing touches to a Bentley at its Dresden factory
German exports remain strong
Germany grew faster than expected in the past three months, official figures have shown, signalling a further recovery in Europe's largest economy.

GDP grew by 0.6% in Germany between July and September, an improvement on the previous quarter's 0.2% increase.

The rise was largely down to strong export growth, and the period also saw increased investment by businesses.

But economists remain divided over the strength of the recovery amid signs that consumer spending remains weak.

Jobs hope

The economy grew 1.3% on a year-by-year basis over the period, according to figures published by the Federal Statistics Office. Experts had forecast a 1% rise.

The data confirms our expectations for a strengthening of the recovery
Wolfgang Clement, Economy minister

On a quarterly basis, growth is now back to the same level seen at the start of the year following a surprise decline in the second quarter.

Overseas demand for German goods remained strong during the period, enabling firms to increase investment in their operations.

German ministers said this raised hopes of more jobs being created.

"Overall, the data confirms our expectations for a strengthening of the recovery," said outgoing economy minister Wolfgang Clement.

'Renewed vigour'

The new government has made improving Germany's economic competitiveness one of its main priorities.

Some economists believe the economy is heading in the right direction as greater wage restraint improves labour market conditions.

We are a long way from a self-sustaining recovery
Andreas Rees, HypoVereinsbank economist

"The German economy, long derided as the sick man of Europe, is showing clear signs of renewed vigour," Holger Schmieding, an economist with the Bank of America, told Agence France Presse.

However, other figures released on Tuesday showed a further decline in consumer spending over the past three months.

Weak demand

Consumer confidence remains fragile, making life difficult for retailers and other business reliant on domestic sales.

Some experts believe economic growth will slow in the fourth quarter to 0.25%.

"We are a long way from a self-sustaining recovery," said Andreas Rees, economist with HypoVereinsbank.

"The health of the German economy remains strongly dependant on the global economy."




SEE ALSO:
Germany sees trade surplus soar
09 Nov 05 |  Business
German consumers more optimistic
27 Oct 05 |  Business
German gloom as output declines
07 Oct 05 |  Business
Reshaping Germany's companies
15 Sep 05 |  Business


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