The German economy expanded by just 0.4% in 2013 (compared to 0.7% in 2012), less than experts had expected.
Last year Germany’s GDP grew at its slowest rate since 2011.
The negative impact of the euro crisis was only partly offset by stronger domestic demand.
Despite these disappointing figures, the majority of analysts believe Europe’s biggest economy should expand by approximately 2.2% this year as the global economy rebounds and low interest rates boost investment.
Source: Federal Statistics Office (Statistisches Bundesamt)
A poll carried out by Reuters involving 18 prominent economists had forecast 0.5% growth for 2013.
Germany’s Federal Statistics Office, which released the data today, believes GDP grew by approximately 0.25% during the last quarter of 2013, compared to 0.3% during the second quarter.
Eurozone crisis affected Germany
In a news conference today, Roderich Egeler, head of the Federal Statistics Office, said “It appears the crisis in the Eurozone put the brakes on the German economy.”
Industry orders had increased strongly in November, as had other forward-looking data as well as investor, consumer and business confidence.
Most of the Eurozone economies are starting to show promising data. Eurostat, the European Union’s statistical office, revealed yesterday that in November industrial production had increased at its fastest pace since 2009. However, the French economy is floundering.
Germany’s 2013 budget deficit, at 0.1% of GDP, was higher than several forecasts of a balanced budget.
Of the Group of Seven countries, Germany is the first to report Q4 growth data. Its economic path is key in determining how the other 17 Eurozone nations fare. The euro area has stubbornly high unemployment levels and very little lending.
German private consumption increased
Bloomberg News quoted Christian Schulz, a Berenberg Bank economists who works in London, as saying “Germany’s weak 2013 GDP growth highlights the impact of the euro crisis even on the strongest euro-zone economy. On the positive side, consumption growth was resilient in 2013 and the beginning global recovery should allow Germany to grow at trend rates in 2014.”
In 2013, German private consumption rose 0.9%, and government spending increased by 1.1%. While exports gained 0.6% imports rose 1.3%. Capital investment, however, declined 2.2%.
In an interview with the Wall Street Journal, Ebrahim Rahbari, a Citigroup economist, said “The annual growth number is weaker than I thought, but it isn’t indicative for 2014. We expect the German economy to expand by 2% in 2014 and 1.9% in 2015, exceeding growth in virtually all other euro-zone countries except perhaps for Ireland.”