Germany's rapid economic contraction is coming to an end, industrial production and export data signalled yesterday, raising hopes that Europe's largest economy is back on a more stable footing.
After plunging last year, German industrial production remained flat in March.
Exports rose 0.7 per cent in the first month-on-month increase since September, adding to evidence that continental Europe's severe recession is easing - even if a return to growth seems some way off. "We have left behind the freefall of the first quarter," said Jörg Krämer, chief economist at Commerzbank in Frankfurt.
The scale of the contraction in the past six months has left Germany badly scarred and its economy is expected to perform significantly worse this year than those of the US or UK.
The country's dependence on exports, especially of machinery and equipment to emerging economies, left it particularly exposed to the slump in global demand.
Industrial output fell by 6.6 per cent in the fourth quarter of last year, but the pace of decline accelerated in the first quarter, which saw a 12 per cent decline. Industrial output in February and March was down at levels not seen since mid-1999.
First-quarter German gross domestic product figures next week are expected by economists to show a quarter-on-quarter contraction of as much as 3.5 per cent - comfortably beating the already severe 2.1 per cent fall seen in the final three months of last year.
Unemployment is expected to rise strongly. However, forward-looking indicators suggest that the pace of decline will have moderated sharply by the middle of this year, raising the possibility of GDP growing again later in the year.
Business confidence surveys have rebounded, and industrial orders figures this week showed an unexpected 3.3 per cent rise in March. - (Copyright The Financial Times Limited 2009)
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