The German economy grew 1.9% in 2016, its biggest rise in five years – The Chronicler

The German economy, the main engine of growth in the euro zone, expanded 1.9% in 2016, its highest rate in five years, according to today unveiled a preliminary estimate of the Federal Statistics Office.

Europe’s biggest economy is benefiting from the increase in private consumption and increased state spending to help the refugees, which makes up for the lower contribution of the trade and the low demand of its major economic partners and emerging markets.

Economists surveyed by Reuters had expected a growth of the Gross Domestic Product (GDP) from 1.8% in 2016, then the rate of expansion of 1.7% dropped from the previous year.

The annual growth of 1.9% was in line with the higher range of the forecasts in the poll.

The Statistics Office said it estimated that German GDP expanded by around 0.5% in the fourth quarter.

“The German economy again in 2016, challenged a number of downside risks, thanks to robust domestic demand,” said economist at ING Carsten Brzeski, adding that now the main threat was complacency.

A breakdown of the GDP figures of the 2016 indicated that private consumption rose 2% adjusted basis in the year, contributing 1.1% to the growth rate of total.

meanwhile, state government spending jumped by 4.2%, then you have noted a rise of 2.7% in 2015. The increase in government spending added 0.8% to the total expansion.

"The economy urgently needs the impetus for new structural reforms and public and private investment more robust. It is very unlikely that you will resolve any of these issues before the elections," he said.