Reuters logo
UPDATE 2-German economy grew just 0.4 pct in 2013 but picking up steam
January 15, 2014 / 11:17 AM / in 4 years

UPDATE 2-German economy grew just 0.4 pct in 2013 but picking up steam

* Weakest GDP performance since 2009 global financial crisis

* Import outpaced export growth, consumption supportive

* Growth expected to pick up this year, helped by exports

By Sarah Marsh

BERLIN, Jan 15 (Reuters) - The German economy grew by a weaker than expected 0.4 percent last year, its worst performance since the global financial crisis in 2009, with strong domestic demand only partially offsetting the continued negative impact of the euro crisis.

Yet economists said the data masked the underlying strength of Europe’s largest economy, which they said could grow by up to 2.2 percent in 2014 as the global upturn boosts exports and low interest rates unleash a recovery in investment.

The preliminary gross domestic product (GDP) estimate from the Federal Statistics Office, released on Wednesday, fell just short of the consensus forecast for a 0.5 percent expansion in a Reuters poll of 18 economists.

The Office said the economy probably grew by around a quarter of a percentage point in the last quarter, in line with the 0.3 percent GDP expansion in the previous three months.

“Under the surface of below-trend growth, the economic success story continued as unemployment remained low... Private consumption continued its upward trend and even investment showed first signs of life,” said Carsten Brzeski at ING.

“With the improved global economic outlook, filled order books, low inventories and the stable labour market, all the ingredients for another strong growth performance of the German economy are there,” he said.

Recent forward-looking data has been strong. Business, consumer and investor sentiment have risen to multi-year highs over the past month, while industry orders surged in November.

“We’re expecting growth in 2014 of 2.2 percent. But there are risks out there,” said Berenberg economist Christian Schulz, citing Germany’s continuing vulnerability to any resurgence of the euro zone crisis.

The euro zone is also showing signs of recovery. Data on Tuesday showed industrial production in the currency bloc rose in November at its fastest pace in nearly four years, but some states, including its No 2 economy France, are still struggling.


Germany has proved a pillar of strength throughout the euro zone crisis, but growth slowed to 0.7 percent in 2012 and the economy skirted recession at the start of 2013 before picking up steam from the second quarter on.

Excluding 2009, when the economy shrank by 5.1 percent, its biggest contraction of the post-war era, 2013 proved Germany’s weakest since 2003 when it was dubbed the “Sick Man of Europe”.

That prompted then-chancellor Gerhard Schroeder to unveil far-reaching reforms of the welfare state, which are now being diluted by the new right-left coalition of Angela Merkel’s conservatives and the Social Democrats (SPD).

Investments took 0.1 percent off GDP last year as companies held off on investing due to uncertainty over the euro zone crisis. Foreign trade, which had underpinned growth for the previous three years, subtracted 0.3 percent.

The fact import growth outpaced that of exports could tame criticism of Germany’s traditional reliance on exports and suggests it is contributing to recovery among its euro zone trading partners by buying up their products.

Germany faced international criticism earlier in 2013 for not doing enough to reduce its high trade surpluses. The U.S. administration reprimanded Germany in October in its semi-annual report to Congress for its economic imbalances.

Private and public consumption rose 0.9 and 1.1 percent respectively in 2013, helping domestic demand contribute 0.7 percent to GDP despite the drag from investments.

The private household savings rate dropped to its lowest level since 2001 as low interest rates and a robust labour market encouraged traditionally thrifty Germans to spend.

The public sector budget swung to a slight deficit of 0.1 percent after posting a surplus of 0.1 percent in 2012.

The BGA trade association has said it expects exports, the cornerstone of the Germany economy for decades, to grow by up to 3 percent in 2014.

“The German economy managed to assert itself in 2013 in a difficult environment,” BGA head Anton Boerner said in a statement on Wednesday. “The departure point for a good 2014 is favourable, not least thanks to a stronger world economy.”

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below