German economy contracts in 4Q as exports slump two per cent

FRANKFURT: German exports slumped by two per cent in the fourth quarter of 2012, causing the overall economy — Europe’s biggest — to contract by 0.6 per cent, official data showed yesterday.

The federal statistics office Destatis had already estimated in preliminary data last week that German gross domestic product (GDP) shrank by 0.6 per cent in the October to December period.

The office confirmed that estimate yesterday and also provided a breakdown of the different GDP components.

While private consumption grew by 0.1 per cent and state spending was up by 0.4 per cent in the period from October to December, construction investment eased by 0.1 per cent and investment in equipment fell by two per cent, the statisticians calculated.

Overall, domestic demand edged up by 0.2 per cent in the fourth quarter.

“By contrast, foreign trade had a negative effect on the economic development, with exports of goods and services falling by two per cent,” Destatis said.

With imports also declining by 0.6 per cent, the foreign trade component knocked 0.8 percentage points off GDP growth in the October to December period, it said.

Economic growth in Germany slowed throughout all of last year as the eurozone debt crisis put the brake on exports.

GDP grew by 0.5 per cent in the first quarter of 2012 and then by 0.3 per cent in the second quarter and 0.2 per cent in the third quarter.

With the contraction of 0.6 per cent in the fourth quarter, the economy expanded by just 0.7 per cent across the whole of 2012, compared with three per cent in 2011, Destatis said in a statement.

The statisticians noted, however, that due to the timing of the Christmas holidays, there were three fewer working days in 2012 than in 2011.

Adjusted for that effect, the German economy grew by 0.9 per cent overall last year, they calculated.

Destatis also said Germany’s public finances were back in the black for the first time in five years, with the overall public budget showing a surplus of 4.2 billion euros (US$5.6 billion) for 2012.

Measured against GDP of 2.644 trillion euros for the year as a whole, that represented a surplus ratio of 0.2 per cent, slightly higher than a preliminary estimate of 0.1 per cent released in January, Destatis said.

It was the first time since 2007 and only the third time since unification in 1990 that Germany’s finances have been in the black, the statistics authority said.

Under European Union rules, member states are not allowed to run up deficits in excess of three per cent of GDP.

In 2011, Germany’s finances had been in the red with a deficit equivalent to 0.8 per cent of GDP. — AFP