Germany's economic growth slowed slightly in 2005 and faced risks at the end of the year, the Federal Statistics Office said today.
The office said German 2005 gross domestic product grew 0.9 per cent, down from 1.6 per cent in 2004. That was slightly above the government's last official 0.8 per cent target but just below the mid-range forecast of economists for growth of 1 per cent.
Adjusted for differences in the number of working days, the office said growth was 1.1 per cent, the same rate as in 2004.
"All in all the German economy developed only in a cautiously positive direction. Above all, the situation in the labour market and the weak domestic demand remained problematic," Statistics Office President Johann Hahlen said.
"Growth clearly accelerated (after the 2nd quarter), although the development at the end of the year remained filled with risks," he added.
Germany's budget deficit at 3.5 per cent of gross domestic product exceeded the European Union's limit for a fourth consecutive year, the office confirmed.
Mr Hahlen said the economy probably did not grow at all in the fourth quarter compared with the prior three-month period, a shock to analysts who had been projecting quarterly growth of up to 0.4 per cent.
Officials stuck to that estimate of a fourth quarter stagnation when pressed repeatedly, although they noted that they did not have all the data yet. A first official estimate of fourth-quarter GDP is due to be released on February 22nd.
Germany's labour market and domestic demand, which increased just 0.2 per cent in 2005 after 0.6 percent in 2004, remained "problematic", Mr Hahlen said.
The data showed German workers' earnings fell for the first time since unification, and worried households increased savings to 10.6 per cent of GDP, the highest level since 1995.
Headline growth was almost entirely driven by exports, which rose 6.2 per cent year on year.