Germany's Economic Slowdown Worries
Experts Predict Continued Recovery Despite Stagnation
02/12/2010
A construction worker in Düsseldorf. A long spell of harsh winter weather has hurt Germany's construction industry and the entire economy.
Germany officials reported no growth for the fourth quarter of 2009 on Friday. While some fear that the slowdown might signal the beginning of another slump, others just see it as a bump in the road to continued recovery.
The 2009 slump in Germany's economy is now official. Germany's Federal Statistical Office reported Friday that the gross domestic product of Europe's largest economy unexpectedly fell by 5 percent last year and that 2009's fourth quarter saw no growth over the previous quarter.
The announcement came as a surprise to many experts who had been expecting a 0.2 percent rise in fourth-quarter growth. The stagnation followed slight rises, of 0.4 percent and 0.7 percent, in the second and third quarters of 2009, respectively. The second quarter rise technically brought the country out of a deep recession ushered in when the global economic crisis spawned massive drops in German exports, the traditional driver of the country's economy.
The office also reported that economic performance in all quarters of 2009 were below figures for the same periods in 2008. In real terms, GDP in the fourth quarter of 2009 was 1.7 percent lower than figures from the same quarter in 2008. When compared with the previous year, GDP for 2009 as a whole dropped by 2.4 percent, though that was still much better than the year-on-year drops of the second and third quarters -- 5.8 percent and 4.8 percent, respectively.
The office, which will publish more detailed fourth-quarter figures on Feb. 24, attributed most of the positive signs in 2009 to exports, noting that drops in imports, consumer spending and capital investment had slowed economic growth.
'We Don't Have a Self-Sustaining Recovery Yet'
A number of experts attributed the unexpected drop to factors such as the end of Germany's cash-for-clunkers program in September and the harsh weather conditions that have gripped Germany for most of the winter. "Just look out your window and you know why," Andreas Rees, the chief German economist at UniCredit, told the Associated Press. "The harsh winter weather is depressing construction activity."
Nevertheless, most economists seem cautiously optimistic. "The road to normalcy will be long and hard, and a quick normalization is not to be expected," Jörg Lüschow, an economist at WestLB, told Reuters. "I can't rule out a slump, but I think it is less likely."
Simon Junker, an economist at Commerzbank, echoed Lüschow's confidence. "The fourth quarter figures are disappointing, but it doesn't mean the end of the recovery," he told Reuters, adding that he thought the first quarter of 2010 could even see a 0.5 percent rise in growth, with steeper rises to follow in subsequent quarters.
Germany's government expects a projected 5.1 percent rise in exports to lift its 2010 economy by 1.4 percent. On Tuesday, experts at the International Monetary Fund backed up this optimism by forecasting German growth for 2010 at 1.5 percent. Still, German Economics Minister Rainer Brüderle cautioned reporters last Friday that "we don't have a self-sustaining recovery in Germany yet."
jtw -- with wire reports
Experts Predict Continued Recovery Despite Stagnation
02/12/2010
A construction worker in Düsseldorf. A long spell of harsh winter weather has hurt Germany's construction industry and the entire economy.
Germany officials reported no growth for the fourth quarter of 2009 on Friday. While some fear that the slowdown might signal the beginning of another slump, others just see it as a bump in the road to continued recovery.
The 2009 slump in Germany's economy is now official. Germany's Federal Statistical Office reported Friday that the gross domestic product of Europe's largest economy unexpectedly fell by 5 percent last year and that 2009's fourth quarter saw no growth over the previous quarter.
The announcement came as a surprise to many experts who had been expecting a 0.2 percent rise in fourth-quarter growth. The stagnation followed slight rises, of 0.4 percent and 0.7 percent, in the second and third quarters of 2009, respectively. The second quarter rise technically brought the country out of a deep recession ushered in when the global economic crisis spawned massive drops in German exports, the traditional driver of the country's economy.
The office also reported that economic performance in all quarters of 2009 were below figures for the same periods in 2008. In real terms, GDP in the fourth quarter of 2009 was 1.7 percent lower than figures from the same quarter in 2008. When compared with the previous year, GDP for 2009 as a whole dropped by 2.4 percent, though that was still much better than the year-on-year drops of the second and third quarters -- 5.8 percent and 4.8 percent, respectively.
The office, which will publish more detailed fourth-quarter figures on Feb. 24, attributed most of the positive signs in 2009 to exports, noting that drops in imports, consumer spending and capital investment had slowed economic growth.
'We Don't Have a Self-Sustaining Recovery Yet'
A number of experts attributed the unexpected drop to factors such as the end of Germany's cash-for-clunkers program in September and the harsh weather conditions that have gripped Germany for most of the winter. "Just look out your window and you know why," Andreas Rees, the chief German economist at UniCredit, told the Associated Press. "The harsh winter weather is depressing construction activity."
Nevertheless, most economists seem cautiously optimistic. "The road to normalcy will be long and hard, and a quick normalization is not to be expected," Jörg Lüschow, an economist at WestLB, told Reuters. "I can't rule out a slump, but I think it is less likely."
Simon Junker, an economist at Commerzbank, echoed Lüschow's confidence. "The fourth quarter figures are disappointing, but it doesn't mean the end of the recovery," he told Reuters, adding that he thought the first quarter of 2010 could even see a 0.5 percent rise in growth, with steeper rises to follow in subsequent quarters.
Germany's government expects a projected 5.1 percent rise in exports to lift its 2010 economy by 1.4 percent. On Tuesday, experts at the International Monetary Fund backed up this optimism by forecasting German growth for 2010 at 1.5 percent. Still, German Economics Minister Rainer Brüderle cautioned reporters last Friday that "we don't have a self-sustaining recovery in Germany yet."
jtw -- with wire reports
