2009 worst year for German output since the war as stagnation sets in
Published 14/01/2010 | 05:00
EUROPE'S largest economy may have shown no growth in the final three months of the year, making 2009 the worst for German output since the end of World War Two.
Germany's statistics office said overall economic output (GDP) fell an estimated 5pc last year, with most of the damage concentrated in the early part of the year.
Analysts were more surprised by comments of a statistics office official who said GDP may have stagnated over the last three months of 2009, after two quarters of expansion, with a 0.7pc rise in GDP during July-September boosting hopes of recovery.
German Economy Minister Rainer Bruederle said yesterday that recovery was not yet self-sustaining and that a long haul back from recession would not be helped by recent severe winter weather.
"If total GDP was flat, this means that private consumption almost certainly fell in the last quarter," said Gabriel Stein of Lombard Street Research in London.
"For a Germany even more dependent on exports, the outlook for 2010 looks bleak indeed. A weaker euro would help, but not solve, Germany's problem, which is weak domestic demand."
Industrial output figures from Britain and Italy for November were also slack, reinforcing concerns about the strength of recovery.
"It's not great," said Deutsche Bank economist Gilles Moec. "It confirms we had an exceptional third quarter but Q4 is much more subdued.
"That is true of Italy, but also France and the eurozone in general."
Italian industrial output in November fell a touch short of the forecast at just 0.2pc more than October, according to the national statistics institute.
In Britain, output increased 0.4pc from the previous month but the lion's share of that was due to a surge in the oil and gas extraction sector.
"If manufacturing can't expand when there are so many favourable tailwinds -- currency weakness, end of destocking and rebounding global demand -- when can it?" said Alan Clarke, economist at BNP Paribas.
JP Morgan economist Greg Fuzesi said the latest news out of Germany tempted him to reduce a forecast for first-quarter GDP in the eurozone as a whole from an annualised 2pc to 1.2pc.
"For now, we are inclined to stick to this basic story, but our confidence has taken a bit of beating in the past couple of weeks," he said in a note to clients. (Reuters)