German growth steady in 2016 as inflation approaches European Central Bank target

Gross domestic product climbed 0.4 percent sequentially, the same pace of growth as seen in the third quarter but weaker than the previously estimated 0.5 percent. Analysts had expected 0.5% growth. Still, it marked a sharp rebound after the German economy barely expanded over the summer months.

That is down from a rough estimate issued last month of 0.5 percent and caused a revision to the growth rate of the eurozone as a whole - to 0.4 percent compared with an earlier estimate of 0.5 percent. Many economists have expressed concern about the long-term health of the German economy as its open door policies on immigration have cost the government billions of dollars.

It was revealed the eurozone's largest economy Germany appears to already be hit by uncertainty, with fourth quarter growth also coming in at a lower than expected 0.4 per cent.

Economic growth in Germany and Italy was significantly lower at the end of 2016 than forecasts predicted after a year in which the continent witnessed rising populism, Brexit and terrorist attacks that killed more than 100 people.

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Consumer prices, harmonized to compare with other European countries, rose by 1.9 percent on the year in January, separate data released on Tuesday showed.

The change is partly down to a dismal performance of industrial output, which had its biggest fall in more than four years in December.

"The upshot is that the comparatively high rate of headline inflation in Germany is unlikely to dissuade the European Central Bank from maintaining its asset purchases throughout this year", he said.

But economists caution that uncertainties about future trade relations with the United Kingdom and the US and a risk of rising anti EU-sentiment ahead of key elections in Germany, France and the Netherlands could weigh on consumer spending and corporate investment.