German economic growth slowed in 2011 as the sovereign debt crisis damped exports.
Gross domestic product increased 3 percent after gaining 3.7 percent in 2010, the most since German reunification two decades ago, the Federal Statistics Office in Wiesbaden said today. Economists forecast growth of 3 percent, according to the median of 27 estimates in a Bloomberg News survey. Germany’s budget deficit amounted to 1 percent of GDP last year.
Europe’s largest economy is cooling as slower global growth and weaker demand from debt-stricken euro-area neighbors erode foreign sales. It may still avoid a recession as unemployment at a two-decade low supports consumer spending.
“Last year was a good year even if the situation deteriorated toward the end of 2011,” said Aline Schuiling, an economist at ABN Amro in Amsterdam. “While the industrial sector has suffered a blow from the sovereign debt crisis, more resilient domestic demand could prevent the economy from contracting too strongly.”
Domestic demand was the main contributor to GDP growth last year, adding 2.1 percentage points, the statistics office said. Private consumption increased 1.5 percent in the year, while government spending rose 1.2 percent. Investment in plant and machinery gained 8.3 percent.
Net Trade
Net trade contributed 0.8 percentage points to growth, with exports up 8.2 percent and imports gaining 7.2 percent. In 2010 exports increased 13.7 percent.
Continental AG (CON), Europe’s second-biggest car-parts maker, said on Dec. 29 that revenue in the fourth quarter will be slightly higher than in the third as the company’s tire and electronics businesses grew faster than competitors.
At the same time, Fresenius Medical Care AG (FME), the world’s biggest provider of kidney dialysis, on Dec. 20 cut its 2011 revenue forecast, blaming the weaker euro.
“Last year we had more and more evidence that the recovery was broadening out, with domestic demand and investment strong,” said Jens Sondergaard, senior economist at Nomura International Plc in London. “There’s a constant tug-of-war between the positive of domestic demand and the negative drag of the sovereign debt crisis.”
