The eurozone debt crisis brought the German economy, Europe’s biggest, to a standstill at the end of last year, data showed yesterday, but the pause in growth will prove only temporary, analysts said.
According to preliminary figures from the national statistics office, Destatis, Germany’s GDP contracted by 0.2 percent in the fourth quarter of last year compared with the preceding three months.
That was fractionally better than expected — analysts had been penciling in a contraction of about 0.3 percent. Furthermore, third-quarter growth was revised upward slightly to 0.6 percent quarter-on-quarter, compared with an original estimate of 0.5 percent.
A precise breakdown of the growth data is to be published next week, but exports — traditionally the engine of the German economy — appeared to have been hit by the long-running debt crisis in the single currency area.
“The German economy suffered a small setback at the end of 2011,” Destatis said in a statement. “Foreign trade had a negative effect on the economy in the final quarter of 2011, but consumer spending also declined slightly.”
The only positives came from investment on a quarter-on-quarter basis in the period from October to December, with construction investment, in particular, much higher than in the third quarter, Destatis said.
Last month, the statistics authority had estimated that GDP would likely contract by about 0.25 percentage points in the fourth quarter as the debt crisis slammed the brakes on growth.
Nevertheless, taking last year as a whole, the German economy grew by a robust 3 percent after growing by a record 3.7 percent the previous year.
Analysts predicted that the lull in growth at the end of last year would likely be short-lived.
The dip in GDP was “not as deep as expected, confirming that the German economy only took a growth pause and is not approaching a new recession,” ING Belgium economist Carsten Brzeski said.
Low inventories and a still high backlog of orders would act as “an important safety net for industry, ensuring production even if demand for German products would weaken,” he said.
Annalisa Piazza at Newedge Strategy also believed the fourth-quarter GDP figures were “a touch less gloomy than expected.”
It was “the first contraction in activity since early 2009 and — in our view — just a one-off event,” the analyst said, predicting a “modest improvement already in the first half.”
Meanwhile, France’s economy grew 1.7 percent last year, in line with the government’s target, after a better-than-expected fourth quarter growth of 0.2 percent, the national statistics institute INSEE said yesterday.
The government had maintained its forecast of 1.75 percent, even though most economists expected growth for the year to be 1.6 percent, forecasting a contraction of 0.2 percent in the three months to December.