Reuters reported that Germany exited recession in the second quarter despite a massive drop in inventories and restocking by firms could spur the economy to faster growth.

Federal Statistics Office data confirmed that gross domestic product grew by 0.3% in April to June 2009 period as net trade and private consumption offset the reduction in firms' inventories. The data ended four straight quarters of contraction, and could offer support for Chancellor Ms Angela Merkel's ruling coalition as a federal election approaches on September 27th 2009.

Government stimulus measures, such as a subsidy for scrapping old cars in exchange for newer, more environmentally friendly models, were seen by many as a key driver of growth in the April to June 2009 period.

The figures showed that adjusted for working days, German GDP contracted by 5.9% on the year in the second quarter, confirming preliminary estimates from August 13th 2009. In the first quarter, it shrank by 6.7%.

In a breakdown of the data, the Office said net trade added 1.6 percentage points to GDP as a sharp drop in imports outpaced a decline in exports. Private consumption added 0.4 points and a liquidation in inventories subtracted 1.9 points.

(Sourced from www.reuters.com)