Germany’s annual growth falls down

WIESBADEN, Germany - Agence France-Presse

Michael Sommer (L), head of Germany’s labour union association DGB, shakes hands with German Chancellor Angela Merkel in Berlin. REUTERS photo

The German economy notched up its weakest growth in four years last year, as Europe’s biggest economy increasingly feels the pain from the region’s debt crisis, official data showed on yesterday.

Nevertheless, analysts believe the lull in growth will prove only temporary.

And for the first time in five years, Germany was able to get its finances in order and achieve a modest public surplus thanks to record low unemployment and record low interest rates.

German gross domestic product (GDP) shrank by around 0.5 percent in the fourth quarter of last year, bringing full-year growth to just 0.7 percent, the federal statistics office Destatis calculated in preliminary data.

In 2010 and 2011, the German economy had expanded by 4.2 percent and 3.0 percent respectively.

The government’s forecast for 2012 had been around 0.75 percent. Throughout the crisis, Germany has fared a great deal better than its neighbours thanks to deep and painful economic reforms undertaken a number of years ago.

But with many eurozone members in recession, Germany has not been able to remain completely immune, with growth slowing particularly in the latter half of last year.

Details in February

After expanding by 0.5 percent in the first quarter, 0.3 percent in the second quarter and 0.2 percent in the third quarter, Destatis’ top statistician Norbert Raeth said GDP likely contracted by “around a quarter of a percentage point” in the period from October to December.

Destatis is not scheduled to publish more precise fourth-quarter GDP data until next month.

Nevertheless, Destatis president Roderich Egeler pointed out that Germany was still faring much better than most of its European neighbours, many of which were in recession.

“Overall, the German economy proved itself to be very robust,” Egeler insisted.