German economy looks good in its first quarter

Category: Global Economy Sub-category: World Economy
Document type: news

18-May-2012 | 10:10 IST | Edited by: Sharmila Maitra

Confirming the resilience of Europe's top economy to the surrounding turmoil, Germany has avoided recession despite the resurgent eurozone debt crisis.

According to the Federal statistics, the German economy grew by 0.5% in the first quarter of the year, and after contracting at the end of 2011, dodging a recession defined as two consecutive quarters of negative growth.

Analysts had pencilled in growth of 0.1%. But the data were much better than the market had expected.

Moreover, the analysts also have said that compared to the same period the previous year, the economy grew by 1.7%.

On the other hand, the statisticians noted that the growth is driven both by trade as well as by domestic demand.

Both exports and imports are at a record high, data earlier this month showed, as demand outside Europe for goods 'made in Germany' continues to grow strongly.

Meanwhile, unemployment is near its lowest level since reunification in 1990, in turn boosting domestic consumption and reducing Germany's reliance on trade.

Further, Germany's future growth path is expected to be firm.

Germany suffered more than most from the international economic and financial crisis that worsened with the collapse of US investment bank Lehman Brothers - contracting nearly 5% in 2009 - but has since rebounded strongly.

After growing by 3.7% in 2010 and by 3% last year, Berlin, however, has forecasted a much smaller increase of 0.7% for this year, which is nonetheless still respectable compared with the eurozone as a whole.

The growth rate is expected to be more than double to 1.6% next year, according to economy ministry forecasts.