by Melanie Loos
The German gross domestic product (GDP) has increased by only 0.1% in the first quarter of 2013. After an already weak final quarter of 2012 – when the German economy contracted by 0.7% – this means that Germany has just escaped a recession. Experts had expected a stronger growth. According to the Federal Statistical Office the weak growth is partially due to extreme winter conditions.
When in comes to the components of GDP, the only positive momentum for the German economy came from private consumption, which increased by 0.8% in the first quarter of this year. As regards investment, the negative tendency of 2012 continued with investment decreasing by 0.6% compared to the previous quarter. Government spending diminished only slightly by 0.1%. Net exports had hardly any impact on the economic growth in the first quarter, yet despite the downward trend in imports, exports are declining as well.
So what are the economic prospects for this year? In the European Economic Forecast of Spring 2013 the European Commission expects the German GDP to grow by 0.4% in 2013 and by 1.8% in 2014. The Commission also projects a positive outlook for private consumption and exports, although net exports are likely to contribute less to GDP growth.
In the context of the European Union, Germany is still doing relatively well. While Germany’s overall growth rate was +0.7% in 2012, the GDP of the EU as a whole contracted by 0.3%. According to the European Commission’s Spring Forecast the latter will slowly increase to -0.1% in 2013 and to 1.4% by 2014.