Germany answers critics as French GDP disappoints

Germany answers critics as French GDP disappoints

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Germany's economy expanded 0.3 percent in the third quarter - and the country's statistics office delivered a broadside to critics in Brussels and Washington on Thursday.

Its near-neighbor, and one of its critics, France, reported disappointing GDP figures, also on Thursday, as concerns about reforms to its economy grow.

Germany, the euro zone's biggest economy and its most successful one in recent years was predicted to deliver third quarter gross domestic product (GDP) growth of 0.3 percent from the previous three months, and 0.6 percent from the same time in 2012. It delivered on both fronts.

Germany's statistics office said in a statement that the growth was driven by domestic demand rather than exports, countering criticism that it is not doing enough to stimulate spending at home. Critics argue that Germany should be encouraging its people to spend more on foreign imports to help stimulate growth in the rest of Europe.

The European Commission has launched an investigation into whether Germany's current account surplus (which means it ships out more than it brings in) indicates a serious imbalance in its economy this week.

(Read more: EU exec opens Germany probe )

"Germany is in a way doing its bit here. If you look at Eurostat data, you can see that Germany no longer has a surplus versus countries in the euro zone. It's entirely with countries outside the euro zone, which is a sign of Germany's great strength," Julian Callow, chief international economist at Barclays, told CNBC.

"German companies know the true state of the global competition, because that's where their business is."

(Read more: German business to Europe: Copy us, don't criticize us )

He also expressed concerns that France is "slipping back."

The euro zone's second-largest economy's gross domestic product (GDP) shrunk by 0.1 percent in the third quarter of 2013, compared to an expected 0.1 percent growth. It grew by 0.2 percent in the same period in 2012, lower than the expected 0.3 percent growth.

Pierre Moscovici, France's finance minister, told reporters that the downturn was not surprising, and added that he expected the country to reverse the trend in the last quarter of the year. Reuters cited him as saying GDP should still grow at between 0.1 and 0.2 percent in 2013.

The country saw its credit rating downgraded to AA from AA on Friday by ratings agency Standard & Poor's, which argued that Francois Hollande's government had not progressed quickly enough in reforming the country's economy.

(Read more: S&P cuts France's credit rating )

"Unemployment is the big issue that's confronting countries in Europe," Callow said. "Full credit to those countries, like Germanyand the U.K., where unemployment is coming down."

As expected by analysts, Italy - the third largest economy in the euro zone -- saw its output contract by 0.1 percent quarter on quarter, marking two and a quarter years of recession for the country.

Follow Catherine on Twitter: @cboylecnbc

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