Germany: GDP growth decelerates in 2013
January 15, 2014
According to a preliminary estimate from the Federal Statistics Institute (Destatis), GDP expanded 0.4% in 2013, which marked a deceleration compared to the 0.7% expansion registered in 2012. The reading, which fell short of market expectations of a 0.5% expansion and the Bundesbank's estimate of 0.6%, represents the slowest GDP growth since the height of the global financial crisis in 2009. The figure is still subject to revision and more detailed data for 2013, including the Q4 results, will be released on 14 February.
The economy's deceleration in 2013 was mainly due to a weaker external sector. Exports of goods and services increased 0.6% in 2013, which marked a slowdown compared to the 3.2% expansion observed in 2012. Imports grew 1.3%, which was virtually in line with the 1.4% pace registered in 2012. Given that exports decelerated more than imports, the external sector's net contribution to overall economic growth swung from a 0.9 percentage-point contribution in 2012 to a 0.3 percentage-point detraction in 2013.
Conversely, domestic demand improved compared in 2012 on the back of healthier total consumption. Growth in private consumption accelerated slightly from a 0.8% increase in 2012 to a 0.9% expansion in 2013. In addition, government spending grew 1.1% in 2013, which was a tad faster than the 1.0% increase tallied in 2012. Conversely, gross fixed capital formation decreased 0.8% in 2013, albeit at a slower pace than in 2012 (-2.1% year-on-year).
For 2014, the Bundesbank expects economic activity to increase 1.7%. For 2015, the Bank sees economic growth picking up to 1.8%. FocusEconomics Consensus Forecasts panelists' projection is broadly in line with the Bundesbank. They expect economic activity to expand 1.7% in 2014, which is unchanged from last month's forecast. For 2015, the panel forecasts GDP to accelerate to 1.9%.
Author: Ricardo Aceves, Senior Economist