The German economy is “in better shape” than feared, analysts said yesterday, after detailed data for the fourth quarter last year showed a dashboard with few red lights despite flat growth.
Figures from federal statistics authority Destatis confirmed preliminary readings of 0.0 percent expansion from October to December, adjusted for price, seasonal and calendar effects.
“German economic growth has stalled,” the statisticians said in a statement, with the flatline in the final three months of last year following contraction of 0.2 percent from July to September.
That meant Europe’s powerhouse only just escaped a technical recession — two successive quarters of negative growth — in the second half of last year.
Nevertheless, “the German economy is in a better shape than its current reputation,” economist Carsten Brzeski of ING Diba bank commented on the release.
Private consumption, government spending and investments all picked up, while imports and exports grew at about the same pace, leaving the nation’s trade surplus almost flat.
“None of the traditional growth components” were negative, Brzeski said, adding that the data showed the massive car industry’s struggles to adapt to new tougher emissions tests were the main culprit for the slowdown.
Stocks of newly built cars had piled up in the second and third quarters, he said, before being finally delivered in the fourth after passing the worldwide harmonized light vehicle test procedure introduced in September last year.
“Inventories were a massive drag” on growth in the final three months, Unicredit analysts agreed, calculating the effect slowed the economy by “a whopping 0.6” percentage points.
“The temporary problems in the car industry mask solid fundamentals,” Brzeski said.
“In a couple of months, the German economy should be able again to show its true colors,” he said.
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