German recovery unexpectedly stalls
Germany’s economic recovery unexpectedly stalled in the fourth quarter of 2009 as waning consumption and investment offset export growth.
Gross domestic product, adjusted for seasonal effects, was unchanged from the third quarter, when it rose 0.7pc, the Federal Statistics Office in Wiesbaden said today.
The median estimate in a Bloomberg News survey of 33 economists was for growth of 0.2pc. By contrast, French growth accelerated to 0.6pc in the fourth quarter from 0.2pc in the third.
Germany’s economy, Europe’s largest, emerged from the recession in the second quarter of last year and helped drive a recovery in the 16-nation euro area.
While a global rebound has fueled demand for European exports, rising unemployment, expiring government stimulus measures and ballooning budget deficits are threatening growth across the region.
“Calling this the end of the upswing would be premature,” said Juergen Michels, chief euro-area economist at Citigroup in London. “But we’re starting the year at a lower level and growth forecasts will be harder to reach.”
The statistics office said exports made a positive contribution to fourth-quarter German GDP, while consumption and investment declined.
The economy contracted 5pc in 2009. The Bundesbank forecasts growth of 1.6pc this year.
The euro dropped almost half a cent to $1.3644.
Economists predict euro-area growth slowed to 0.3pc in the fourth quarter from 0.4pc in the third. The data will be published by the EU’s statistics office in Luxembourg at 11am today. The pace of Italy’s expansion probably slowed to 0.1pc from 0.6pc. That report is due at 10am in Rome.
The Spanish economy contracted for a seventh quarter in the final three months of last year, undermining the nation’s fight to rein in one of the largest budget deficits in the euro region. Bond yields have surged in Spain, Greece and Portugal on concern those countries won’t be able to rein in their budget shortfalls.
European leaders yesterday pledged “determined and coordinated action” to support Greece’s efforts to regain control of its finances, while stopping short of providing taxpayers’ money.
Some German companies are struggling with sluggish domestic demand as unemployment rises. Hugo Boss AG, Germany’s largest clothing maker, said on February 3 that full-year profit fell 7pc on costs for closing unprofitable stores.
Expansion of Asian markets may sustain German growth this year. The IMF last month forecast 2010 economic growth of 9.7pc and 7.8pc in China and India respectively, compared with 1.6pc expansion in the euro area and 2.4pc in the US. The IMF sees the global economy expanding 3.9pc.
German exports unexpectedly jumped in December, notching their fourth successive monthly gain. The BGA wholesale and export federation on January 12 predicted exports will rise as much as 10pc this year, driven by demand from China.