Germany wards off recession with moderate growth | Business| Economy and finance news from a German perspective | DW | 15.05.2012
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Germany wards off recession with moderate growth

Germany's economy has successfully rebounded from end-of-2011 contraction, posting a surprising increase in gross domestic product (GDP) in the first quarter of this year.

Germany avoided recession despite the resurgent eurozone debt crisis, the Federal Statistics Office (Destatis) reported on Tuesday. It said Europe's biggest economy grew by 0.5 percent in the first quarter of 2012, compared to the final quarter in 2011 when there was a contraction.

The data were much better than market analysts had expected. They had forecast only marginal 0.1-percent growth on average for the first three months of the current year. Compared with the same period last year, the German economy even jumped by 1.7 percent, or 1.2 percent in calendar-adjusted terms as there was one more working day in 2012.

The Statistics Office said the positive development was driven both by trade and domestic demand. Both exports and imports were at a record high as demand for goods "Made in Germany" continued to grow strongly and domestic consumption picked up.

Solid outlook

"The German economy has escaped the technical recession many other eurozone countries are currently experiencing with no more than a fright," ING Bank Senior Economist Carsten Brzeski told the AFP news agency.

Forward-looking barometers of economic performance suggest that Germany will not stray from the growth path any time soon. The closely-watched Ifo business confidence survey, for instance, has risen for the past six consecutive months.

The government in Berlin has warned, though, that last year's growth of 3.0 percent cannot be repeated this year with the debt crisis still continuing. The Economics Ministry has forecast a much smaller increase of 0.7 percent for 2012 which would still be respectable compared to the eurozone as a whole. Next year, growth in Germany is expected to reach 1.6 percent.

hg/ai (AFP, dpa, Reuters)