German economy stuns with unexpectedly strong growth in fourth quarter
Reuters
Published Feb 13, 2015 07:43
German economy stuns with unexpectedly strong growth in fourth quarter
By Alexandra Hudson
BERLIN (Reuters) - Germany grew by a much stronger than expected 0.7 percent in the fourth quarter of 2014, with domestic demand lifting Europe's largest economy out of its mid-year lull to take growth for the whole year to 1.6 percent and raise hopes of a strong 2015.
Quarterly GDP beat not only the consensus forecast for 0.3 percent in a Reuters poll, but also all individual estimates. The overall growth rate for 2014 overshot the Statistics Office's January estimate of 1.5 percent.
"This is a thunderbolt. Economic recovery in Germany started much earlier than expected. Some spoke of possible recession after the summer but instead Germany rebounded. The fact that the growth comes mainly from the domestic economy gives strong grounds for optimism," said economist Andreas Rees at Unicredit.
"Thanks to 2014's strong finish we have a higher chance of seeing stronger-than-expected growth this year, which would help the rest of the euro zone."
Unadjusted data showed the economy grew by 1.6 percent on the year in the fourth quarter, also far exceeding the consensus forecast in a Reuters poll for 1.0 percent growth. Third-quarter data growth was confirmed at a previously reported 0.1 percent.
"Compared to the previous quarter positive momentum came mostly from the domestic economy. Private households in particular increased spending again significantly," the Statistics Office said.
With annual inflation at more than five-year lows, falling oil prices and low interest rates, Germans are preferring to spend rather than save. Firms also looked to have shrugged off mid-year uncertainty about global political events such as the Ukraine crisis to invest again.
After a strong start to 2014 the German economy just dodged recession in the middle months of the year, before the hoped-for recovery began to take hold at the end of 2014. The government recently forecast annual growth in 2015 of 1.5 percent.
The Statistics Office said the statistical overhang for 2014 stands at 0.5 percent.
Get The App
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.