A sharp downturn in exports left the German economy in contraction at the end of 2012. Newest figures suggest that Germany could be more vulnerable to the eurozone crisis than previously thought.
German exports plunged by two percent in the final three months of 2012, ending nine months of economic expansion, according to latest data released by Germany's Federal Statistics Office (Destatis) on Friday.
The Destatis figures confirmed a preliminary estimate indicating that the export slump was primarily responsible for a contraction of German gross domestic product (GDP) by 0.6 percent in the fourth quarter. As foreign trade knocked 0.8 percentage points off the German GDP in that quarter, overall economic growth in 2012 came in at just 0.7 percent.
Apart from declining fourth-quarter exports, two percent lower capital investments also drove the contraction, Destatis added. This couldn't be offset by growing domestic consumption and higher state spending.
However, economists viewed the contraction in the fourth quarter 2012 as a one-off because current sentiment indicators pointed to a solid first-quarter rebound.
"We expect to see growth again because exports will probably revive and domestic demand will develop stably," Ulrike Kastens, an economist with Sal. Oppenheim told Reuters news agency.
And Holger Sandte, chief economist at Nordea, told the same news agency that investments were expected to pick up again as uncertainty over the eurozone is abating and the global economy was recovering.
In related news, Destatis figures also showed Germany's public finances were back in the black for the first time in five years. The overall budget ran a surplus of 4.2 billion euros ($5.6 billion) in 2012.
uhe/ipj (Reuters, dpa, AFP)