German economy grows at fastest pace in 3 years


Germany’s economy grew at its fastest pace in three years in 2014 and posted its third annual budget surplus after regaining modest momentum in the final quarter, data released on Thursday showed.economy

Europe’s biggest economy grew by 1.5 per cent last year. Gross domestic product (GDP) expanded by about 0.25 quarter on quarter in the final three months of the year following a bout of weakness in the middle of 2014, the statistics office Destatis said.

The 2014 growth rate was in line with analysts’ forecasts. The pickup was driven by a solid gain in domestic demand and a jump in exports.

“The German economy turned out to be strong in a difficult global economic environment, benefiting especially from a strong domestic demand,” said Destatis chief Roderich Egeler.

After growing strongly in the first quarter of 2014 as a consequence of mild winter weather, the economy narrowly avoided a recession in the middle of the year as a result of feeble demand in the eurozone and uncertainty created by global tensions, notably in Ukraine.

Still, German exports rose 3.7 per cent last year compared with 2013 as the euro weakened against the backdrop of expectations of fresh stimulus measures from the European Central Bank and moves to higher interest rates in the US. Exports increased 1.6 per cent in 2013.

Reflecting continuing strong domestic demand, German imports rose 3.3 per cent in 2014 compared with 3.1 per cent in the previous year.

As a result, foreign trade contributed 0.4 percentage points to overall economic growth, Destatis said.

At the same time, private and public investment in machinery and equipment rebounded from a slump in the two previous years to rise 3.7 per cent in 2014.

Private consumption climbed 1.1 per cent last year helped along by rising wages and an improvement in the labour market.

German GDP posted a meagre 0.1-per-cent expansion rate in 2013 and grew by 0.4 per cent in 2012. The economy expanded by 3.6 per cent in 2011.

The budget surplus rose to 0.4 per cent of GDP in 2014 from a surplus of 0.1 per cent in the two previous years, Destatis said.

This meant that Germany was once again comfortably within the strict fiscal targets set out in the EU’s Maastricht Treaty, which require euro member states to have a budget deficit of no more than 3 per cent of GDP.

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