By: DailyForex.com
If this was Star Trek, Spock would be poring over the German Q1 economic data and would remark; “It’s growth Jim – but not as we know it!” Germany has managed to return to growth in Q1 2013, but the figure came in at just 0.1%. The largest economy in the EU contracted by 0.7% in the fourth quarter of 2012, so a further contraction would have pushed the nation into recession – the growth seen in this quarter is hardly spectacular, but at least it has prevented Germany from returning to recession.
The German economy has hardly been going from strength to strength – a direct comparison of Q1 2013 against Q1 2012 shows that the economy has contracted by 1.4%. The figures are subject to revision, but show that exports fell by 1.8% and imports declined by 2.1%, domestic demand was stronger with household spending seeing a 0.8% rise in the quarter. Indeed, according to a survey of 2000 households conducted by GfK, a market research group, consumer sentiment has risen in each of the last six months. The domestic market is dominant in any economy, so this at least is good news.
Germany is enjoying the highest level of employment in the EU, along with Austria, at the moment. It is also experiencing modest wage agreements and a declining inflation figure which help to foster consumer confidence. On Friday, the IfO business confidence index rebounded after two months of falling sentiment. The May figure stood at 105.7 up from 104.4 in April – a figure above the 100 level indicates an optimistic outlook. Most analysts had anticipated that the index would be unchanged this month.
Whilst the German economy has expanded, the Eurozone bloc as a whole continued to contract in Q1 2013. The Eurozone economy contracted by 0.2% in Q1, its sixth straight quarter of contraction making this the longest recession that the bloc has ever experienced.