Economic recovery stalls

AFP/The Local
AFP/The Local - [email protected] • 12 Feb, 2010 Updated Fri 12 Feb 2010 10:37 CEST
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The German economy stagnated in the fourth quarter of 2009, halting the European heavyweight's rebound from a deep recession, data released on Friday by the Federal Statistics Office showed.

"The recovery of the German economy lost momentum at the end of 2009," the office said in a statement.

The zero result compared with the previous quarter came after Germany posted growth of 0.7 percent in the third quarter of the year and an expansion of 0.4 percent in the three-month period from April to June.

Economic activity contracted by a massive 3.5 percent in the first three months of 2009, however, as Germany suffered its worst recession since World War II.

The economy is heavily dependent on exports and once again they made the only positive contribution in the final three months of the year, since consumption and business investment were both down, the Federal Statistics Office said.

On Tuesday, the International Monetary Fund nonetheless forecast growth in Germany of 1.5 percent this year, slightly higher than the government's forecast of 1.4 percent.

"Today's numbers are a setback but no disillusion," ING senior economist Carsten Brzeski stressed in reference to the German figures.

"The eurozone growth engine has taken a break in the fourth quarter but it should return soon," he added, while noting that the numbers were "a good reminder that recoveries can not only be bumpy but also capricious."

UniCredit economist Andreas Rees said that "the situation of the German economy is fundamentally far better than it looks like from a statistical viewpoint."

But "with the recent return of risk aversion in financial markets, doubts about the strength of the recovery have again emerged." Brzeski warned.



AFP/The Local 2010/02/12 10:37

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