The German economy, Europe's biggest, turned in the slowest growth for four years last year as the sluggish global economy and eurozone recession took their toll, data showed on Wednesday.
But strong domestic demand kept Germany's economic engine ticking over and will place it in a good position for recovery this year, analysts said.
Gross domestic product (GDP) grew by just 0.4 percent in 2013, down from 0.7 percent a year earlier and the slowest rate since 2009, the federal statistics office Destatis calculated in preliminary data.
It is also slightly lower than analyst forecasts for full-year growth this year of around 0.5 percent.
"It seems that the German economy was hit by the ongoing recession in a number of European countries and the sluggish global economy," said Destatis chief Roderich Egeler.
"Strong domestic demand could only partially compensate for this. Nevertheless, after the period of weakness last winter, the economic situation improved over the course of 2013," Egeler said.
In the fourth quarter alone, the German economy expanded by "around a quarter of a percent" after growth of 0.3 percent in the third quarter, said the statistics office chief economist Norbert Raeth.
Destatis is scheduled to publish a more concrete estimate on February 14.
But GDP growth was zero in the first quarter of last year, 0.7 percent in the second quarter and 0.3 percent in the third quarter.
German economy in good shape
Economy Minister Sigmar Gabriel said that "even if annual average growth figure looks fairly subdued, it has to be seen positively.
"Germany was largely able to escape the recession that has hit a number of euro-area countries. The German economy is in good shape. All indicators suggest that consumers and companies are counting on a broad-based recovery," Gabriel said.
Analysts agreed.
"The eurozone crisis hurt export-orientated industries, particularly at the start of last year," said Ferdinand Fichtner of the DIW economic think tank.
"But since the spring, GDP has expanded at a moderate pace," he said.
Commerzbank chief economist Joerg Kraemer said the German economy "has sustained the solid gain seen in the third quarter."
And rising leading indicators, such as confidence surveys, "suggest that the expansion will probably continue at a similar pace in the first quarter" of this year.
He was forecasting growth of 1.7 percent for the whole year 2014, Kraemer said.
UniCredit economist Andreas Rees said "the odds have risen that we are getting some kind of a big bang in form of a spectacularly high growth number for the first quarter of 2014."
Indeed, UniCredit is pencilling in growth of 2.5 percent for the whole of this year, way above consensus, Rees said.
Berenberg Bank economist Christian Schulz said that Germany's "weak 2013 GDP growth highlights the impact of the euro crisis even on the strongest eurozone economy."
The long recession in the countries that share the euro "prevented stronger growth and a lack of confidence had caused companies to shelve investment plans for a long time," he said.
Nevertheless, "2013 was also the year recovery finally started. Consumption growth was resilient in 2013 and the beginning global recovery should allow Germany to grow at trend rates in 2014," Schulz concluded.
Growth driven by domestic demand
Germany has come under heavy fire recently, from both its European neighbours and the United States, for its booming trade surplus, which critics argue has been built up at the expense of the country's crisis-ridden neighbours.
But the Destatis data appeared to contradict this interpretation, since imports grew faster than exports, meaning that the net foreign trade balance shaved 0.3 percentage point off overall growth.
Domestic consumption, on the other hand, contributed 0.7 percentage point to growth.
"While some people abroad still think that the German economy is exclusively driven by exports and complain about an excessive current account surplus, the exact opposite was true," said Rees at UniCredit.
Germany's public finances were also slightly in the red last year, with a deficit equivalent to 0.1 percent of GDP compared with a slight surplus in 2012, Destatis calculated.
The Finance Ministry calculated that the budget deficit amounted to 22.1 billion euros in 2013, 3.0 billion euros below forecast as a result of lower-than-expected spending.
The German economy, Europe’s biggest, turned in the slowest growth for four years last year as the sluggish global economy and eurozone recession took their toll, data showed on Wednesday.
But strong domestic demand kept Germany’s economic engine ticking over and will place it in a good position for recovery this year, analysts said.
Gross domestic product (GDP) grew by just 0.4 percent in 2013, down from 0.7 percent a year earlier and the slowest rate since 2009, the federal statistics office Destatis calculated in preliminary data.
It is also slightly lower than analyst forecasts for full-year growth this year of around 0.5 percent.
“It seems that the German economy was hit by the ongoing recession in a number of European countries and the sluggish global economy,” said Destatis chief Roderich Egeler.
“Strong domestic demand could only partially compensate for this. Nevertheless, after the period of weakness last winter, the economic situation improved over the course of 2013,” Egeler said.
In the fourth quarter alone, the German economy expanded by “around a quarter of a percent” after growth of 0.3 percent in the third quarter, said the statistics office chief economist Norbert Raeth.
Destatis is scheduled to publish a more concrete estimate on February 14.
But GDP growth was zero in the first quarter of last year, 0.7 percent in the second quarter and 0.3 percent in the third quarter.
German economy in good shape
Economy Minister Sigmar Gabriel said that “even if annual average growth figure looks fairly subdued, it has to be seen positively.
“Germany was largely able to escape the recession that has hit a number of euro-area countries. The German economy is in good shape. All indicators suggest that consumers and companies are counting on a broad-based recovery,” Gabriel said.
Analysts agreed.
“The eurozone crisis hurt export-orientated industries, particularly at the start of last year,” said Ferdinand Fichtner of the DIW economic think tank.
“But since the spring, GDP has expanded at a moderate pace,” he said.
Commerzbank chief economist Joerg Kraemer said the German economy “has sustained the solid gain seen in the third quarter.”
And rising leading indicators, such as confidence surveys, “suggest that the expansion will probably continue at a similar pace in the first quarter” of this year.
He was forecasting growth of 1.7 percent for the whole year 2014, Kraemer said.
UniCredit economist Andreas Rees said “the odds have risen that we are getting some kind of a big bang in form of a spectacularly high growth number for the first quarter of 2014.”
Indeed, UniCredit is pencilling in growth of 2.5 percent for the whole of this year, way above consensus, Rees said.
Berenberg Bank economist Christian Schulz said that Germany’s “weak 2013 GDP growth highlights the impact of the euro crisis even on the strongest eurozone economy.”
The long recession in the countries that share the euro “prevented stronger growth and a lack of confidence had caused companies to shelve investment plans for a long time,” he said.
Nevertheless, “2013 was also the year recovery finally started. Consumption growth was resilient in 2013 and the beginning global recovery should allow Germany to grow at trend rates in 2014,” Schulz concluded.
Growth driven by domestic demand
Germany has come under heavy fire recently, from both its European neighbours and the United States, for its booming trade surplus, which critics argue has been built up at the expense of the country’s crisis-ridden neighbours.
But the Destatis data appeared to contradict this interpretation, since imports grew faster than exports, meaning that the net foreign trade balance shaved 0.3 percentage point off overall growth.
Domestic consumption, on the other hand, contributed 0.7 percentage point to growth.
“While some people abroad still think that the German economy is exclusively driven by exports and complain about an excessive current account surplus, the exact opposite was true,” said Rees at UniCredit.
Germany’s public finances were also slightly in the red last year, with a deficit equivalent to 0.1 percent of GDP compared with a slight surplus in 2012, Destatis calculated.
The Finance Ministry calculated that the budget deficit amounted to 22.1 billion euros in 2013, 3.0 billion euros below forecast as a result of lower-than-expected spending.
