Construction, consumption steer German economy back to growth path

A worker walks on scaffolding at the Axel Springer Campus, still under construction, in Berlin on February 23, 2019. (AFP)
Updated 15 May 2019

Construction, consumption steer German economy back to growth path

  • Gross domestic product in Europe’s largest economy expanded by 0.4 percent quarter-on-quarter
  • Growth figures a ‘first ray of hope’ following two quarters without expansion

BERLIN: The German economy returned to growth in the first quarter, helped by higher household spending and a booming construction industry, preliminary data showed on Wednesday.
Gross domestic product (GDP) in Europe’s largest economy expanded by 0.4 percent quarter-on-quarter, the Federal Statistics Office said. This was in line with analysts’ expectations.
Compared with the same quarter of the previous year, the economy grew 0.7 percent, calendar-adjusted data showed. This was also in line with the forecast.
Economy Minister Peter Altmaier said that the growth figures were a “first ray of hope” following two quarters without expansion, but this was no reason to give the all-clear.
“The international trade disputes are still unresolved. We must do everything possible to find acceptable solutions that enable free trade,” Altmaier said.
Altmaier, a confidant of conservative Chancellor Angela Merkel, repeated a call to support companies by cutting red tape and taxes. Finance Minister Olaf Scholz, a Social Democrat, has declined to cut corporate taxes.
The Statistics Office said growth was mainly driven by construction and increased household spending.
It confirmed that the German economy contracted by 0.2 percent in the third quarter of last year and stagnated in the fourth.


Oman’s sultan says government will work to reduce debt

Updated 23 February 2020

Oman’s sultan says government will work to reduce debt

DUBAI: Oman's Sultan Haitham bin Tariq al-Said said on Sunday the government would work to reduce public debt and restructure public institutions and companies to bolster the economy.
Haitham, in his second public speech since assuming power in January, said the government would create a national framework to tackle unemployment while addressing strained public finances.
"We will direct our financial resources in the best way that will guarantee reducing debt and increasing revenues," he said in the televised speech.
"We will also direct all government departments to adopt efficient governance that leads to a balanced, diversified and sustainable economy."
Rated junk by all three major credit rating agencies, Oman's debt to GDP ratio spiked to nearly 60% last year from around 15% in 2015, and could reach 70% by 2022, according to S&P Global Ratings.
The small oil producing country has relied heavily on debt to offset a widening deficit caused by lower crude prices. Also, the late Sultan Qaboos, who ruled Oman for nearly 50 years, held back on austerity measures.
The country has delayed introducing a 5% value added tax from 2019 to 2021, and economic diversification has been slow, with oil and gas accounting for over 70% of government revenues.
Last week, rating agency Fitch said Oman was budgeting for a higher deficit of 8.7% for 2020 despite its expectation of further asset-sale proceeds and some spending cuts.
"We are willing to take the necessary measures to restructure the state's administrative system and its legislation," Haitham said in his first speech since the mourning period for Qaboos ended, without elaborating.
He said there would be a full review of government companies to improve their business performance and competence.
Oman observers have said that if Haitham moves to decentralise power it would signal willingness to improve decision making. Like Qaboos, he holds the positions of finance minister and central bank chairman as well as premier, defence and foreign minister.