EU crisis dampens German growth
February 15, 2012
The German economy - Europe's growth engine over the past few years - sputtered at the end of 2011, shrinking by 0.2 percent in the fourth quarter in comparison to the previous three-month period, the country's statistics authority Destatis reported Wednesday.
The figure was adjusted for price and seasonal factors, Destatis said, and could only slightly dent Germany's overall growth in 2011, which increased by 3 percent.
The quarterly loss of 0.2 percent falls slightly short of the 0.25 percent drop predicted by economists. And although fourth quarter GDP declined, it was still 2 percent higher than in the same quarter a year before.
Carsten Brzeski, an economist with ING Global Research told AP news agency that the contraction was "no cause for any greater concern," adding: "The economic contraction turned out to be weaker than expected, confirming that the German economy only took a growth pause and is not approaching a new recession."
2012 pickup on the cards
In January, the German government revised its 2012 growth forecast from 1 percent to 0.7 percent, saying that weaker foreign demand for German goods, notably from debt-stricken eurozone countries would be weighing on the economy here.
Arnd Schäfer, analyst for WEST LB, also said that growth in Germany was affected by "external influences."
"But we are confident that low inflation and positive employment figures will keep private consumption high so that we expect the German economy to grow by 0.8 percent this year," he told Reuters news agency.
Meanwhile, German investor confidence has hit a 10-month high in February, according to data released by the ZEW economic think tank on Tuesday, indicating that growth could be back on track already in the first quarter of this year.
Author: Uwe Hessler (Reuters, AP, dpa)
Editor: Neil King