Germany on Tuesday said its economy grew at a faster pace than expected in the third quarter, fuelling calls for the incoming government to loosen the purse strings and invest more to keep Europe's powerhouse humming.
Last week, Berlin's council of economic advisers warned Merkel that the economy risked overheating amid what they described as "a major upturn". On average, analysts had forecast 2.4 percent annual growth, but the official figure surpassed this by nearly a percentage point, The Wall Street Journal reported.
While German business confidence is at an all-time high, investor confidence is also up, order books are full, unemployment is at an historic low and the trade surplus is also in record territory, according to recent official data.
This left the annual, calendar adjusted, growth rate at 2.8% from 2.3% in the second quarter.
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Germany continued to display why its economy remains the engine behind the eurozone's solid performance this year as growth continued at a "high rate" in the third quarter.
Government and consumer spending "remained rather stable" in the third quarter, it added, while noting that investments had increased, particularly "in machinery and equipment".
"The German economy is now showing its best performance over such a long period since the mid-1990s", said ING Bank economist Carsten Brzeski.
Gross domestic product (GDP) rose by 0.8 percent between July and September compared with the previous quarter, powered by foreign demand and increased investment, the federal statistics office Destatis said.
The German economy's strength is likely to help shore up Chancellor Angela Merkel's political authority as she attempts to cobble together an untested coalition led by her conservative bloc amid fraught talks between the parties.
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