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Germany: Economy picks up in Q4 on private consumption and investment

February 24, 2015

In Q4 2014, GDP expanded at the fastest pace in three quarters, rising a seasonally-adjusted 0.7% over the previous quarter, according to more complete data published by the Federal Statistics Office (Destatis) on 24 February. The expansion followed Q3’s mild 0.1% increase, which had helped the economy to avoid a technical recession. The reading matched the preliminary estimate and met market expectations. Compared to the same quarter of the previous year, GDP increased 1.6% in Q4, which came in above the 1.2% expansion registered in the previous quarter.

In the full year 2014, the economy grew 1.6%, which is up notably from 2013’s mild 0.1% expansion.

The quarterly expansion was mainly driven by robust private consumption and a rebound in fixed investment. Private consumption in Q4 recorded a 0.8% expansion over the previous quarter, matching Q3’s result, which had represented the largest gain since Q3 2011. Government consumption decelerated, falling from Q3’s 0.6% increase to a weaker 0.2% growth in Q4. Gross fixed investment rebounded from Q3’s 1.2% contraction to a 1.2% expansion in Q4, the best result in three quarters.

On the external front, exports of goods and services increased 1.3% in Q4, which came in below Q3’s 2.0% rise, the fastest expansion since Q1 2011. Imports growth slowed from a 1.3% increase in Q3 to a 1.0% expansion in Q4. Consequently, the external sector’s net contribution to overall economic growth edged down from Q3’s 0.4% to 0.2% in the fourth quarter.

The Bundesbank expects economic activity to increase 1.0% in 2015. For 2016, the Bank sees economic growth picking up to 1.6%. FocusEconomics Consensus forecast panelists expect economic activity to expand 1.4% in 2015, which is unchanged from last month’s forecast. For 2016, the panel forecasts GDP growth of 1.8%.


Author: Teresa Kersting, Economist

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Germany GDP Q4 2014

Note: Quarter-on-quarter changes of seasonally adjusted GDP and year-on-year variation in %.
Source: Federal Statistics Office (Destatis) and FocusEconomics Consensus Forecast


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