Final estimates confirmed that the German economy shrank for the first time since the first three months of 2009, hurt by weak external demand resulting from sluggish global growth and Europe's protracted debt crisis.
Detailed results released by the Federal Statistical Office confirmed on Friday that the fourth quarter gross domestic product contracted 0.2 percent quarter-on-quarter, after adjusting for price, seasonal and calendar variations. This followed a strong 0.6 percent expansion in the third quarter.
The statistical office said that the foreign trade had a negative impact on German economic growth. Exports declined 0.8 percent sequentially compared to expectations for a steeper 1.4 percent decline. This came after a 2.6 percent expansion in shipments in the third quarter.
With a relatively smaller 0.3 percent decrease in imports, net exports deducted 0.3 percentage points from overall GDP growth. Economists expected a 0.9 percent decline in imports during the period. Domestic spending fell 0.1 percent, reducing the GDP by as much as a percentage point.
Meanwhile, investment contributed positively to the GDP, with a quarter-on-quarter growth of 1.1 percent, which was faster than the expected 0.5 percent rise. Investment in construction was 1.9 percent higher in the last quarter of 2011 than in the third quarter, though investment in machinery and equipment remained steady at previous quarter's level.
Consumer spending fell 0.2 percent quarter-on-quarter, while government raised its final consumption expenditure by a marginal 0.1 percent. Total domestic demand had a mild positive effect on GDP.
Annually, the GDP expanded 1.5 percent in the fourth quarter, slower than 2.6 percent rise in the third quarter. On a calendar adjusted basis, GDP was up 2 percent.
For the whole of 2011, the economy expanded 3 percent, slower than the 3.7 percent growth in 2010. All the numbers matched economists' forecast.
The year-on-year growth of the economy was sustained mainly by higher capital investment by enterprises, the statistical office said.
In its Interim forecast released yesterday, the European Commission cut the German GDP forecast for this year marginally to 0.6 percent from 0.8 percent.
The Brussels-based commission also downgraded its 2012 GDP outlook for the Eurozone and said the economy may contract 0.3 percent this year, compared to the 0.5 percent expansion it estimated in the autumn forecast published in November.
Substantial downside risks remain despite some favorable developments in recent weeks, the commission said.
Meanwhile, in its latest monthly report, the Bundesbank said Germany's economic outlook has brightened again, but pointed out that risks relating to sovereign debt crisis persisted.
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