German economy notches up 'solid, consistent' growth in 2015

14th January 2016, Comments 0 comments

The German economy, Europe's biggest, shrugged off the Greek crisis, the economic slowdown in China and geopolitical uncertainties to notch up "solid and consistent growth" in 2015, the federal statistics office said Thursday.

According to a preliminary estimate by Destatis, German gross domestic product (GDP) expanded by 1.7 percent in 2015, fractionally faster than the 1.6 percent recorded in 2014.

At the same time, Germany notched up a surplus on its public budget of 16.4 billion euros ($17.9 billion), equivalent to 0.5 percent of GDP, the office said.

It was the second year in a row that Germany's public finances have been firmly in the black.

Eurozone member countries are not allowed to run up deficits in excess of 3.0 percent of GDP and must aim for a balanced budget for even a surplus in the longer-term.

"The economic situation in Germany in 2015 was characterised by solid and consistent growth," said Destatis president Dieter Sarreither.

"Almost all industrial sectors saw growth," he said.

And the increase in economic activity was driven primarily by domestic demand, Sarreither continued.

"Consumption was the most important growth engine in the Germany economy. Investment and foreign trade helped support the positive trend, too, but to a much smaller extent."

Private consumption was up 1.9 percent in 2015 and government spending grew by 2.8 percent.

Investment in machinery and equipment advanced by 3.6 percent.

Exports were up 5.4 percent and imports expanded by 5.7 percent.

- GDP above 3.0 trillion euros -

In concrete terms, GDP amounted to 3.027 trillion euros ($3.3 trillion) in 2015, the first time ever that it has topped the three-trillion mark, Destatis said.

Output was generated by more than 43 million people in employment, the highest level since unification in 1990, Destatis said.

Looking at the fourth quarter alone, the statisticians did not provide any concrete growth figures for the period from October to December, which are not scheduled to be released until February 12.

But in a very rough estimate, Destatis said it was pencilling in growth of "about a quarter of a percent" for the last three months of 2015, compared with 0.3 percent in the preceding quarter.

ING DiBa economist Carsten Brzeski said he put fourth-quarter growth at around 0.4 percent.

- Defies headwinds -

"2015 was the year ... in which the German economy, despite many headwinds like the Greek crisis, the slowdown in emerging markets and China and increased geopolitical uncertainties, continued its recovery," Brzeski said.

It also marked an important step in the rebalancing of the German economy, as private consumption turned out to be an important driver, contributing 1.0 percentage points to growth, he said.

"Looking ahead, the two-speeded recovery, with strong consumption and services on the one hand and sluggish industrial production and exports on the other hand, should continue in 2016," the expert continued.

Consumption should receive a boost from the record influx of refugees, at least in the short term, the analyst argued.

At the same time, low interest rates, low inflation and high employment should also boost growth.

BayernLB economist Stefan Kipar was similarly confident.

"We're projecting a continuation of the moderate growth trend this year, as well," he said, forecasting annual average growth of 1.8 percent.

"Once again, domestic demand will be the main growth engine. And a balanced budget also seems possible, given the favourable economy and high tax revenues, despite the burdens of taking in refugees," Kipar said.

© 2016 AFP

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