Business World

Monday 27 January 2020

Weakening consumption slows down German recovery

Sarah Marsh

GERMANY'S economic recovery stalled in the fourth quarter of 2009, as weak consumption and reduction of company stocks offset firmer exports.

Detailed figures from the Federal Statistics Office confirmed gross domestic product in Europe's biggest economy was unchanged on the quarter, after expanding in the previous two.

Further clouding Germany's economic outlook, a survey showed consumer morale is likely to decline going into March. Other data pointed to flagging household demand across the euro area.

"It looks as if the German economy has fallen into hibernation: stagnating growth in the fourth quarter and yesterday's weakening Ifo (Institute for Economic Research) index," said Carsten Brzeski, an economist ING Financial Markets.


"However, looks can be deceiving. The underlying trend remains healthy. Demand for German products remains strong."

The GfK market research group said German consumer sentiment was likely to be affected as worries over the economy dent consumers' income expectations and willingness to make purchases.

A French scheme to pay owners of old cars to trade them in for new ones buoyed eurozone industrial orders in December, other data showed.

In Italy, retail sales were flat on the month.

The GfK drop was the fifth in a row for the indicator, but the fall was slightly above economists' expectations.

Net trade added two percentage points to German GDP in the fourth quarter as imports fell and exports jumped.

"This is a classic story for the German economy. Final domestic demand remains very weak and it is left to the booming export sector to keep the economy afloat," said Nick Kounis, chief European economist at Fortis Bank. (Reuters)

Irish Independent

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