• Germany edition
 
Analysts: German downturn won't last
Photo: DPA

Analysts: German downturn won't last

Published: 13 Jan 2013 09:10 GMT+01:00
Updated: 13 Jan 2013 09:10 GMT+01:00

For a long time, Germany managed to remain immune to the economic difficulties plaguing many of its closest neighbours thanks to the deep and painful structural reforms it undertook years earlier.

But it, too, has started to feel the pain from the crisis, according to a whole range of different data published in the later months of last year.

"The difficult international environment was a noticeable burden on the German economy," the Economy Ministry wrote in its latest monthly report on Friday, citing "substantial uncertainty arising from the euro area debt crisis" as well as other factors such as budget problems in the United States.

"Together with weakening demand for German exports, this is also hurting companies' investment plans. As a result, the growth momentum has slowed over the course of the year. Available indicators point to a noticeable contraction in economic output in the final quarter of 2012," the ministry said.

"Germany is an open and integrated economy so it is not surprising that a slowdown in the rest of the euro area has an impact here," European Central Bank chief Mario Draghi said in November.

German growth has indeed been slowing throughout last year: from 0.5 percent in the first three months to 0.3 percent in the second quarter and 0.2 percent in the third.

Official fourth-quarter gross domestic product (GDP) data are scheduled for release on Tuesday. And economists are pencilling in a contraction from anywhere between 0.2-1.0 percent.

Economy Minister Philipp Rösler has already begun to prepare the markets for a contraction, warning of "weaker-than-expected" output and overall annual growth of 0.75 percent for the whole of 2012.

That is a long way from the buoyant growth of 4.2 percent and 3.0 percent that Germany notched up in 2010 and 2011 respectively. But it is also equally far from the 5.1-percent contraction seen in 2009.

Traditionally, German exports have been the main driver of growth, but they have also made the economy vulnerable to downturns in neighbouring eurozone countries.

In November, the value of German exports amounted to €94.1 billion, down from €98.4 billion in October.

ING Belgium economist Carsten Brzeski said it would "take a miracle" for Germany to avoid posting a GDP contraction in the fourth quarter of 2012.

Nevertheless, economists are confident that such a contraction would not be repeated in the first quarter of 2013, meaning Germany would successfully skirt a recession, which is technically defined as two consecutive quarters of declining GDP.

"The outlook will quickly brighten again," said the DIW research institute. The Economy Ministry thought so, too." Overall, the German economy is still very competitive and in good health," it said, pointing out that unemployment which is still close to historical lows will help buoy domestic demand.

Furthermore, with German-made goods still in demand outside the euro area, exports are unlikely to collapse completely.

"Given favourable sales prospects, companies will start to invest again, not least because of the very attractive level of interest rates at present," said DIW economist Simon Junker.

UniCredit analyst Andreas Rees was similarly confident that the outlook for 2013 was "considerably brighter."

The government, for its part, is pencilling in growth of around 1.0 percent for the current year.

AFP/jlb

The Local (news@thelocal.de)

Don't miss...X
Left Right

Your comments about this article

10:10 January 13, 2013 by Englishted
There is too much book cooking with the unemployment figures to be used as any form of guide,and interest rates have been low in the €uro zone but there is no investment or growth in most countries.

Joseph Goebbels's legacy is still in place with none questioning German press.
10:39 January 13, 2013 by Dalmation
Just impose more austerity on the poorer countries and Angie might be able to put a spin that all is OK in Germany until the next election. The reality of the fact is Germany escaping recession so far is a lie. One only has to look at the amount of 400 EUR jobs filling the workplace as well as internships providing employers with very cheap labour. This results in a cycle that Germans have far less spending power than before. The only thing that saved Germany up till now was the weak Euro as opposed to the strong DM. Now those days are coming to an end. I am afraid Angie, you won't be able to click your heals this time to return from the land of Oz. Reality is really biting. You can only hope the German electorate don't call your bluff until after the election.
10:42 January 13, 2013 by smart2012
Ops, did not we say this one year ago? And Verkel + Bild kept saying Germany can stand alone? Germans, get rid of her, otherwise she will bring us to a disaster.. And believe less at Buba, which also played inflexible and one sided role on all of this.
Today's headlines
Germans want sanctions and question World Cup
Chancellor Angela Merkel and President Vladimir Putin chat with Fifa President Sepp Blatter (c) in Brazil before the 2014 World Cup final. Photo. DPA

Germans want sanctions and question World Cup

The majority of Germans favour tough economic sanctions against Russia after the downing of Malaysia Airlines flight MH17. Calls in Germany are also growing also for Russia to be replaced as host of the 2018 World Cup. READ  

Yoga helped Jogi's boys bring World Cup home
Coach Joachim Löw ensured his team had a yoga instructor with them at all times. Photo: DPA

Yoga helped Jogi's boys bring World Cup home

Germany’s World Cup winning football team have revealed one of the secrets of their success in Brazil this summer – yoga. READ  

Court jails student for protest at far-right ball
Josef S. at the court in Vienna. Photo: DPA

Court jails student for protest at far-right ball

UPDATE: A German student, accused of being the ringleader of far-left demonstrators who protested at Vienna’s far-right Akademikerball, has been jailed, despite questionable evidence of his involvement. READ  

Lufthansa cancels Tel Aviv flights
A Lufthansa Boeing 747 at Ben Gurion International Airport in Tel Aviv. Photo: DPA

Lufthansa cancels Tel Aviv flights

Lufthansa said on Tuesday it was suspending its service to Tel Aviv for 36 hours over security concerns amid the escalating Gaza conflict. READ  

German state bans Hells Angels' logo online
Photo: DPA

German state bans Hells Angels' logo online

Displaying the symbols of notorious motorcycle gangs the Hells Angels and the Bandidos is forbidden across Germany, but that ban has now extended to the internet. READ  

Munich man arrested for foreigner death threats
Photo: DPA

Munich man arrested for foreigner death threats

A man from Munich was arrested on Monday for posting videos on Facebook in which he posed with a gun and threatened to kill foreigners. READ  

View from Germany
'Only losers in economic war with Russia'
Volkswagen is the German company with the biggest turnover Russia. Photo: DPA

'Only losers in economic war with Russia'

German businesses are lobbying hard against imposing tougher sanctions on Russia after the downing of Malaysia Airlines flight MH17, warning further sanctions would hurt the country's exports and threaten German jobs. READ  

Man sets himself on fire outside Israeli embassy
The Israeli Embassy in Berlin. Photo: DPA

Man sets himself on fire outside Israeli embassy

UPDATE: A man set himself on fire outside the Israeli embassy in Berlin on Monday night. Police said it was too soon to say whether it was part of a political protest. READ  

Thousands of litres of beer close motorway
Photo: NRW-aktuell.tv/YouTube screenshot

Thousands of litres of beer close motorway

Thousands of litres of beer were spilled on a motorway near Duisburg in western Germany on Monday night, when a truck carrying several hundred crates of Bitburger toppled over, shutting the Autobahn. READ  

Court allows patients to grow their own cannabis
Photo: DPA

Court allows patients to grow their own cannabis

Seriously ill patients will be allowed to grow their own cannabis at home for medicinal purposes, a German court ruled on Tuesday. READ  

RECEIVE OUR NEWSLETTER AND ALERTS
Travel
Plans unveiled for bike trail along former Iron Curtain
Photo: DPA
Business & Money
Jobtalk: How innovative is Germany?
Photo: DPA
Gallery
German Bucket List: How many of these can you tick off?
Photo: DPA
Gallery
Joachim Löw: A career in pictures
Photo: Submitted
Society
Is this expat cat the world's oldest?
Photo: DPA
Gallery
Germany's week in pictures: July 12th - July 18th
Photo: DPA
National
Heatwave to bring highs of 36C to Germany
Photo: DPA
Analysis & Opinion
Should Germany follow France and ban the burqa?
Photo: DPA
Business & Money
Which workers is Germany short of?
Photo: DPA
Gallery
Ten best expat jobs in Germany: Which one would you choose?
Photo: Europeana.de 1914 - 1918
Gallery
A German soldier's life behind WWI lines
Photo: Shutterstock
Features
Some of the most embarrassing mistakes you can make in German
Education
Raising the bar for law & business in Germany
Photo: DPA
Business & Money
JobTalk: All you need to know about working in Germany
Photo: DPA
Features
The Local List Archive - Your guide to all things German
National
Share news tips with The Local Germany
Sponsored Article
CurrencyFair: Why it pays when making overseas transfers
Sponsored Article
Bilingual school turning education on its head
Latest news from The Local in Austria

More news from Austria at thelocal.at

Latest news from The Local in Switzerland

More news from Switzerland at thelocal.ch

Latest news from The Local in Denmark

More news from Denmark at thelocal.dk

Latest news from The Local in Spain

More news from Spain at thelocal.es

Latest news from The Local in France

More news from France at thelocal.fr

Latest news from The Local in Italy

More news from Italy at thelocal.it

Latest news from The Local in Norway

More news from Norway at thelocal.no

Latest news from The Local in Sweden

More news from Sweden at thelocal.se

3,246
jobs available
Toytown Germany
Germany's English-speaking crowd