Germany in surplus

Defying the trend, Germany's public accounts showed a surplus in tax revenues of 8.3 billion euros ($10.4 billion) for the first half of the current year, the Federal Statistics Bureau (Destatis) reported on Thursday.

The surplus equated to 0.6 percent of gross domestic product (GDP). Under EU Maastricht Treaty rules, euro area members are not allowed to run up deficits exceeding 3.0 percent of GDP on the negative side of the ledger and are obliged to bring their budget balances close to zero.

Germany's sound revenue inflow in the period between January and June was due most of all to an 11.6-billion-euro surplus take from workers' pay packets amid record-low unemployment. This more than offset a 3.3-billion-euro deficit run up by the federal and regional state governments as well as munipalities, some of which have major debts.

Growth to slow down

Germany's revenues in the first half of the year increased by 2.9 percent, but with spending only rising by 0.8 percent.

The economy grew by 0.3 percent in the second quarter, preceded by 0.5-percent growth in the first, meaning that Germany has been holding up comparatively well to the protracted sovereign debt crisis that has crippled fellow eurozone nations such as Spain, Italy, Ireland and Greece.

"But the robust performance is not set to last as global demand is easing and German exports to the other eurozone countries will fall sharply in the second half of the year," Newedge Strategy Analyst Annalisa Piazza warned.

The debt crisis is already hurting German investment, with resources put into construction and investments in equipment slipping by 0.3 percent and 2.3 percent respectively in the second quarter.

hg/ipj (AFP, Reuters)