BBC News - German economy posts 0.5% growth in first quarter

The German economy returned to growth in the first three months of the year with a better-than-expected 0.5% rise in GDP, official figures have shown.
German industry is the powerhouse of the eurozone economy

In the final quarter of last year, the German economy contracted by 0.2%, its first dip since 2009.

Meanwhile, the French economy recorded zero growth in the first quarter, after growth of 0.1% at the end of 2012.

Figures released later on Tuesday are expected to show that the eurozone as a whole has returned to recession.

'Weak consumption'

Compared with the same a quarter a year earlier, the German economy grew by 1.7%.

The German statistics agency Destatis said growth in the first quarter was due to a rise in exports and higher domestic consumption.

The return to growth means Germany has avoided a so-called double-dip recession.

In contrast, the French growth figures failed to outperform analysts' expectations, and the growth figure for the final quarter of last year was revised down to 0.1% from 0.2%.

"There was no good surprise," said Philippe Waechter at Natixis Asset Management. "There was weak consumption [and] no investment."

Case for growth

The French GDP figures come on the day of the inauguration of the new French President Francois Hollande, who has vowed to boost economic growth.

In the run up to the presidential election, in which he ousted Nicolas Sarkozy, he campaigned hard for measures focusing on stimulating the economy alongside the austerity measures that have been adopted across the eurozone.

He will visit German Chancellor Angela Merkel later on Tuesday to make the case for growth.

Mr Hollande believes that growth rather than austerity is the best way for governments to reduce their debts, a view that is being discussed more widely as the eurozone economy continues to struggle and increasing numbers of Europeans voice their anger at austerity.

The eurozone economy contracted by 0.3% in the final quarter of last year, and many analysts believe growth figures published later this morning will show further contraction in the first quarter of this year. If they are correct, the eurozone will be back in recession.