Germany's economic recovery stalled in the fourth quarter of 2009, as weak private consumption and investment offset a jump in exports, leaving Europe's largest economy on a weak footing going into 2010.
German gross domestic product (GDP) was unchanged in the fourth quarter of 2009, the Federal Statistics Office said today, with net trade adding two percentage points to GDP as imports fell and exports rose. Private consumption subtracted 0.6 points from GDP in the October-December period, the Office said, while a liquidation in inventories subtracted 1.2 points.
"On first sight, it looks as if the German economy has fallen into hibernation: stagnating growth in the fourth quarter and yesterday's weakening Ifo index," said Carsten Brzeski, an economist ING Financial Markets.
Germany, which is heavily dependent on foreign trade for growth, was hit especially hard by the global crisis last year, when the economy shrank by a record five percent.
The economy pulled out of a recession in the second quarter of 2009 before stalling in the fourth quarter, and recent forward-looking data has suggested the recovery will be rocky.
Data from the Ifo economic think tank yesterday showed business sentiment falling for the first time in almost a year in February, suggesting a harsh winter may send Germany sliding back into contraction in the first quarter.
Economy minister Rainer Bruederle said he was not surprised by the fall in German business morale, and that the country still does not have a self-sustaining recovery.
The decline in business sentiment mirrored a drop in German analyst and investor sentiment in February, which came against the backdrop of market jitters about Greece's debt woes and the potential reverberations through the euro zone.
In a separate release, the GfK market research group said German consumer sentiment is likely to decline going into March as worries over the economy dent consumers' income expectations and willingness to make purchases.
German exports rose by 3.0 per cent on the month in December, pushing foreign demand above the year-ago level for the first time in 14 months, and analysts have said the economy may make up any ground it loses over the winter later this year.
Year-on-year, the economy shrank by 1.7 per cent in the fourth quarter, the data showed, following a 4.7 per cent drop in the July-September period, matching preliminary estimates.
Adjusted for working days, German GDP contracted by 2.4 per cent on the year in the fourth quarter.
Reuters