German economy slower than expected, while France sees “spectacular” results

<p>GDP in Europe’s largest economy has slowed to 0.3 per cent.</p>

The German economy has slowed down this quarter – more than expected by analysts.

Gross domestic product in Europe's largest economy has slowed to 0.3 per cent from 0.7 per cent. Consensus estimates had been 0.5 per cent growth reports the Financial Times.

Despite recent optimism about the German economy, this slow down could raise doubts about the future. Recently, the German government lifted its 2015 forecast from 1.5 per cent to 1.8 per cent – while private sector economists had raised their targets to two per cent or more.

The German statistics office says that German domestic demand grew strongly in the first quarter, with both household consumption and business investment up. However, foreign trade has held back the GDP and an increase in imports has created an imbalance with exports.

France

While Germany's economic figures were worse than expected, France beat most expectations for its first quarter.

The French economy is expanding at the fastest pace in nearly two years and the Financial Times says falling inflation has boosted consumer spending.

Consumer spending went up by 0.8 per cent from 0.1 per cent. Households are buying 1.4 per cent more manufactured goods – including cars, according to statistical agency Insee.

Experts believe that the improved figures for France could help to decrease the country's unemployment rate, which currently stands at more than ten per cent. Prime Minister Manual Valls said he hopes the GDP could grow by as much as 1.5 per cent this year, and that would help boost jobs.

Economist Philippe Waechter agrees. He called France's financial results a "spectacular performance" and thinks there's good news ahead for the French job market. 

"The goal of more than one per cent growth for this year should be exceeded. This will be positive for employment," he said.

However, some experts are less optimistic. Economist Iscaro Diego told the Financial times that the strong growth was unlikely to make a dent in unemployment. 

"We expect the labour market to remain a drag on the recovery, although we also project employment growth to pick up gradually during the second half of 2015," he explained.

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