German economy shrank 5% in 2009
The German economy contracted by a record 5 per cent last year due to a slump in its key export sector, official data showed today, but the government is poised to raise its 2010 forecast.
The contraction in gross domestic product (GDP) was more than five times more severe than the country's previous postwar nadir, and deeper than the consensus forecast in a Reuters poll of 31 economists for GDP to shrink by 4.8 per cent.
"Export demand collapsed, the recession hit Germany's export industry with full force," said Andreas Scheuerle at DekaBank.
"The recovery is also coming in from abroad. We're posting growth again and based on our potential that's good news. But the recovery remains choppy," he said.
Germany will raise its growth forecast for 2010 to about 1.5 per cent from 1.2 per cent, government sources told Reuters yesterday.
Economy Minister Rainer Bruederle said separately he assumed a modest increase in fourth quarter GDP.
"The recession is yesterday's story; today's story is the ongoing recovery, " said Carsten Brzeski at ING Financial Markets.
"Today's numbers, however, mask a slowdown of the rebound in the fourth quarter. The annual GDP drop of 5 per cent would, without any revisions to previous quarters, imply growth of around 0.2 per cent Q/Q in the fourth quarter."
Germany's economy grew by 0.7 per cent quarter-on-quarter in the third quarter of 2009 and by 0.4 per cent in the second.
In 2009, exports declined by 14.7 per cent on the year, outweighing a drop of 8.9 per cent in imports, the stats office said, adding that it looked as though China overtook Germany last year as the world's biggest exporter of goods.
Investment in equipment fell by 20 per cent in 2009.
Germany is heavily dependent on exports for growth, with firms like industrial group Siemens profiting from the country's reputation as a maker of high quality engineering goods.
Siemens' chief executive said last month it would take some time before the global economy returns to pre-crisis levels, citing Dubai's debt problems as a sign that the financial crisis was far from over.