The German economy grew by 0.4% in the final quarter of 2013, giving a modest annual growth figure of 1.3% - the German economy started 2013 with a quarterly growth figure of essentially zero. There were fears at the start of the year that the German economy would fall into recession as the Q4 2012 figure had shown a contraction in the GDP of 0.5%. Quarters 2 and 3 returned positive GDP figures of 0.7 and 0.3% respectively.
The Q4 2013 figure was driven by exports, but German domestic demand was disappointing. Domestic demand is always a key term in any nation’s economic fortunes and had been seen as the driving force of the German economy across the other quarters of the year whilst global demand was relatively subdued.
The decline in domestic demand was estimated to have shaved 0.7% from the GDP figure whilst the export boost added 1.1%, based on comparisons against the previous quarter.
The German statistical agency, Destasis, reported that capital investment was up significantly in Q4 whilst public expenditure was flat, unloading of inventories dampened demand and, as noted, private consumption fell. The government is predicting that domestic demand will increase as the year goes on, but they remain cautious about foreign trade on the back of still anaemic global demand. The government is forecasting that GDP will pick-up to 1.8% for 2014 as a whole.
As a whole, the German economy managed a modest trade surplus of €0.3 billion for 2013, meaning that they are well within the Eurozone convergence criteria specifying that a deficit should not exceed 3% of a nation’s GDP – better not mention the public debt requirement that specifies it should not exceed 60% of GDP though, as estimates put the German figure at 81.5%.