Boom Time

The German economy surged to a strong finish in 2006, leading to a growth rate of 2.7 percent, according to the Federal Statistics Office.

Foreign exports mainly accounted for the economic boom. But Germans also rushed to make big purchases ahead of a sales tax increase. Rising investments and increased industrial production were also factors.

The Federal Statistics Office had previously estimated the German gross domestic product (GDP) to have expanded by 2.5 percent in 2006. But that figure was revised upwards due to a strong performance during the last three months of the year.

The GDP rose by 0 .9 percent in the fourth quarter of 2006, compared with the third quarter.

Unemployment decreased

The economic growth also brought more employment opportunities. The statistics office also reported that in the fourth quarter, the number of people employed rose by 452,000 persons, which equals a 1.2 percent increase from a year before.

Uncertainty remains over how the German economy will fare in 2007. On Jan. 1, sales tax increased from 16 to 19 percent.

"Germany is the euro-region's growth engine and we're getting the impression that the transition into 2007 was maybe smoother than expected ahead of the value-added tax increase this year,'' Kornelius Purps, a fixed-income strategist at Unicredit in Munich told Bloomberg News.

The 2006 economic performance was the best since 2000 for the eurozone's largest economy.