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German economy stagnated in Q4 but seen improving

January 15, 2014

BERLIN (AP) — German economic growth remained subdued in the year’s final quarter, according to estimates released Wednesday, but is widely expected to pick up speed in 2014.

The Federal Statistical Office said Europe’s biggest economy grew 0.4 percent for the full year, less than the 0.5 percent analysts were expecting and its weakest performance since it shrank in 2009, in the wake of the global financial crisis.

That means the economy expanded only about 0.25 percent in the fourth quarter compared with the previous three-month period, according to an initial estimate by the office — about the same as the third-quarter figure of 0.3 percent. An official fourth-quarter number won’t be released until Feb. 14.

Germany, unlike many other countries in the 18-nation eurozone, avoided recession as the continent struggled to get beyond its debt crisis. Still, the crisis hasn’t entirely passed the country by, and last year’s economic expansion was fueled entirely by domestic demand as exports lagged.

“The German economy suffered from the continuing recession in some European countries and from restrained growth of the global economy,” statistical office head Roderich Egeler said as he presented the preliminary 2013 growth estimate. “The strong domestic demand could offset those factors only to a limited extent.”

German exports grew by a feeble 0.6 percent last year, following growth of 3.2 percent in 2012. Imports were up 1.3 percent, little-changed from the previous year’s 1.4 percent.

Private consumption, meanwhile, grew 0.9 percent — slightly above the previous year’s 0.8 percent. Germans have benefited from a sustained period of low unemployment.

“Overall, we think that there is no reason for massive disappointment today,” said Andreas Rees, an economist at UniCredit. “When looking behind the sheer numbers, things were being put on the right track last year for 2014.”

The economy is expected to pick up speed this year as the eurozone continues its recovery from recession, and the government’s current forecast is for growth of 1.7 percent in 2014. It has forecast that exports — a traditional strength of Germany, which has rejected criticism abroad of its foreign trade surpluses — will be stronger this year.

“The starting position for a good economic year in 2014 is favorable, not least thanks to a stronger world economy,” said Anton Boerner, the head of Germany’s BGA exporters’ association. “Companies are confident.”

Germany had a very slight budget deficit of 0.1 percent last year after turning to a surplus of 0.1 percent in 2012, the statistical office said.

Germany’s public finances have been helped by strong tax receipts as the economy grows, and the Finance Ministry said Wednesday that the government borrowed less than expected last year — 22.1 billion euros ($30.2 billion), compared with the 25.1 billion it had planned. Federal government spending totaled 307.8 billion euros.

Chancellor Angela Merkel’s government has pledged to stop new borrowing in 2015.

Update hourly