German economic growth accelerated to 2.5 per cent last year as productivity and domestic demand picked up, Federal Statistics Office data showed today.
The 2006 growth rate, the fastest pace in six years, marked a strong pick-up from the previous year's rate of 0.9 per cent. Europe's biggest economy grew by 3.2 per cent in 2000.
On a workday adjusted basis, 2006 growth was 2.7 per cent, the statistics office said.
Productivity increased by 1.8 per cent last year, up from a 1 per cent gain in 2005. Domestic demand added 1.7 percentage points to 2006 growth, and net trade added 0.7 per cent.
Germany's solid performance in 2006 means it is well placed to weather this month's three-point increase in sales tax that is expected to dent consumer spending and crimp overall growth in the first quarter of this year.
Record optimism among German firms, robust demand for exports and a further pickup in the labour market are widely expected to support 2007 expansion of around 1.8 per cent.