German Economy Contracts 0.6 Percent in Fourth Quarter


German gross domestic product shrunk 0.6 percent in the last quarter of 2012 as traditionally strong exports and investment slowed, according to first estimates by the country's Federal Statistics Office.

Gross domestic product shrank by 0.6 percent in the final three months of 2012, the worst quarterly performance since Germany fell into a recession during the global financial crisis in 2008 and the second contraction since it ended. The fourth quarter pushed overall growth for the year down to 0.7 percent, a sharp slowdown from the 3.0 percent registered in 2011 and a post-reunification record of 4.2 percent in 2010.

Household spending grew 0.8 percent in 2012, down from 1.7 percent in 2011. For the full year, export growth slowed to 4.1 percent from 7.8 percent in 2011, while equipment investment fell by 4.4 percent. At the same time, imports rose by just 2.3 percent. The balance of exports and imports contributed 1.1 percentage points to GDP growth in 2012 and, consequently, was once again the main driving force for economic growth in Germany.
 
Domestic demand developed in different directions. Final consumption expenditure of households (+0.8 percent) and of government (+1.0 percent) increased, whereas capital formation did not contribute positively to GDP growth for the first time since the economic crisis of 2009. Instead, it decreased in part markedly. Gross fixed capital formation in construction fell by 1.1 percent and gross fixed capital formation in machinery and equipment by as much as 4.4 percent.

Destatis | Nuno Fontes | nuno@tradingeconomics.com
2/11/2013 3:06:38 PM