Wednesday, January 15, 2014

Solid but unimpressive German growth in 2013

It is a strange habit of the German statistical office to release GDP data for the entire past year before actually publishing fourth quarter data. According to the just released numbers, German GDP increased by 0.5% in 2013 (a non-calendar adjusted 0.4%). This outcome suggests that the German economy has probably grown by 0.2%-0.3% QoQ in the fourth quarter. Moreover, the statistical office also released a first estimate of Germany’s 2013 fiscal balance. While almost the entire rest of the Eurozone is still engaged in austerity policies, German public finances remain strong. According to the statistical office, Germany recorded a meager fiscal deficit of 0.1% GDP in 2013, missing the historic opportunity to post two consecutive years with a fiscal surplus since 1971. With today’s numbers, the economic year 2013 can almost be filed away. Under the surface of below-trend growth, the economic success story continued as unemployment remained low, employment reached a record high, private consumption continued its upward trend and even investment showed first signs of life. Looking ahead, today’s numbers bode well for a re-acceleration of the German economy in 2014. Technically-speaking, as a result of today's numbers, annual GDP growth would already be at 0.5% even without any quarterly growth at all throughout 2014 (the so-called carry-over effect). But this should not be all. With the improved global economic outlook, filled order books, low inventories and the stable labour market all ingredients for another strong growth performance of the German economy are there.

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