German economy grew 1.5 percent last year

AP News
Posted: Jan 15, 2015 5:40 AM

BERLIN (AP) — Germany's economy grew by 1.5 percent last year, its strongest showing in three years thanks to increasingly strong spending at home and still-healthy exports, official data showed Thursday.

Germany issues a preliminary full-year growth figure before giving an official fourth-quarter growth number, which is due next month. The Federal Statistical Office estimated that the economy grew by around a quarter of a percent in the fourth quarter.

The full-year figure released by the Federal Statistical Office was in line with economists' expectations and was the best performance by Europe's biggest economy since it expanded by 3.6 percent in 2011. In 2012 and 2013, gross domestic product expanded by 0.4 percent and a feeble 0.1 percent respectively.

The economy made a fast start last year before contracting slightly in the second quarter and returning to slight growth in the summer.

Despite fallout from the Ukrainian crisis and the eurozone's weakness, "the economic success story continued as unemployment remained low, employment reached a new record high and private consumption turned out to be an important growth driver," ING-DiBa economist Carsten Brzeski said.

German exports were up 3.7 percent last year despite the "difficult external economic environment," accelerating from a 1.6 percent increase the previous year, the statistical office said. Imports were up 3.3 percent, compared with 3.1 percent in 2013.

That meant that foreign trade contributed a "relatively small" 0.4 percentage points to overall economic growth.

More momentum came from the domestic economy, with investment in machinery and equipment by businesses and the government rising 3.7 percent after declining significantly in the two previous years. Household spending was up 1.1 percent.

Germany's budget surplus increased to 0.4 percent last year from 0.1 percent the previous year — a contrast with the large deficits several other eurozone countries are running. The government said this week that it was able to do without new borrowing last year — a year earlier than planned — for the first time since 1969.