Germany's Deficit More Than Doubles (wsj.com)

By Geoffrey T. Smith

FRANKFURT—Germany's fastest rate of growth in 20 years in the second quarter of 2010 couldn't stop the country's budget deficit from more than doubling in the first half, data showed Tuesday.

The Federal Statistics Office, Destatis, said the general government budget deficit for the first six months of the year, under the methodology laid down by the European Union's Maastricht Treaty, rose to €42.8 billion ($54.2 billion), or 3.5% of gross domestic product, from €18.7 billion a year earlier.

That, however, is still comfortably below original Finance Ministry estimates of a 2010 deficit of around 5% of GDP.

Separately, Destatis confirmed its initial estimate of GDP for the second quarter as having risen 2.2% from the first quarter and 3.7% from a year earlier, in seasonally and calendar-adjusted terms. It also affirmed its revision of first-quarter growth of 0.5% on a quarterly basis and 2.0% on the year.

Breaking down its second-quarter figures for the first time, Destatis said gross investment rose 4.7%, while private consumption rose 0.6% and public consumption rose 0.4%.

As reported, Germany's key export sector enjoyed a double benefit of rising global trade and investment, which benefited its capital-goods industries, along with a decline in the euro's exchange rate, making those goods more affordable across the world.

In addition, and for the first time in a year, private consumption made a positive contribution to growth, adding 0.3 percentage point. Consumption has been the weakest element of the recovery since the end of the recession 15 months ago, due to rising unemployment and increased precautionary saving by households. However, Destatis said Tuesday that employment was 0.2% higher than a year earlier in the second quarter, at 40.3 million...

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