BERLIN — Germany’s economy shrank in the fourth quarter more than at any time since the height of the 2009 financial crisis and may have underperformed the wider eurozone for the first time since then, preliminary data showed yesterday.
Reuters
Economists, however, said Europe’s largest economy, which usually serves as a growth engine for the currency bloc, had turned a corner at the start of 2013 and would not fall into recession, defined as two consecutive quarters of contraction.
“That was a bad fourth quarter. It was down to companies investing less due to uncertainty linked to the debt crisis. It was also, however, due to a weak global economy which put the brakes on German exports,” said Joerg Kraemer at Commerzbank.
“But both these negative factors have fallen into the background . . . All the important early indicators for Germany are pointing upwards. I expect noticeable economic growth again in the first quarter.”
Germany’s economy shrank by 0,6% in the final quarter of 2012 on a seasonally-adjusted basis, a tick worse than a Reuters forecast for a 0,5% contraction and the lowest since shrinking by 4,1% at the start of 2009.
The Statistics Office said weaker foreign trade — exports fell more than imports of goods — was to blame for the decline in the final quarter.
Private and public consumption both rose slightly, but investment in building and equipment fell significantly compared to the third quarter. Final gross domestic product (GDP) data are due on February 22.
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GDP in the 17-member eurozone as a whole is forecast to shrink by 0,4%, according to a Reuters poll of 61 economists.
The French economy, the eurozone’s second largest, shrank by 0,3% in the fourth quarter.
“When it goes well in the eurozone, Germany usually does better than France. When it goes somewhat worse in the eurozone, the French economy does better than the German. Germany is cyclical in that sense,” said Christian Schulz of Berenberg Bank.
