German economy to pick up this year: economy ministry

BERLIN Mon Feb 11, 2013 4:12pm IST

BERLIN (Reuters) - The German economy will gradually regain momentum this year after contracting in the last three months of 2012 as the global economic backdrop improves, the economy ministry said on Monday.

"While weak developments in industrial output and construction point to a contraction in gross domestic product (GDP) in the fourth quarter of 2012, there are increasing signs that we will soon overcome this period of weak economic growth," the ministry said in a monthly report.

It cited improved industrial orders, which rose 0.8 percent in December as demand from the euro zone picked up, and to sentiment surveys that have shown businesses, investors and consumers becoming more optimistic.

Germany's economy contracted by 0.5 percent in the fourth quarter, according to a preliminary estimate. Economists generally see it avoiding a recession, defined as two consecutive quarters of contraction, by growing moderately in the first quarter.

"The weak phase in the global economy seems to have reached its low point already. International indicators are once again increasingly sending positive signals," the ministry said.

Recent data has shown stronger international trade in China and a report indicated that the U.S. trade deficit had narrowed in December, pointing to improving global demand.

The ministry said a stabilisation of international financial markets and in the real economy had made companies and consumers feel more upbeat about Germany's economic prospects.

The fourth-quarter contraction led shoppers to postpone purchases, shown by a steep drop in German retail sales in December, but a noticeable rise in wages last year combined with tax cuts at the beginning of 2013 mean private consumption should hold up, the ministry said.

Data released this month has shown a slight upturn in the German economy, with modest increases in exports, industrial orders and output while sentiment surveys have improved, the private sector expanding and unemployment falling.

(Reporting by Alexandra Hudson, writing by Michelle Martin, editing by Stephen Brown; Editing by John Stonestreet)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Markets

REUTERS SHOWCASE

Segway in India

Segway in India

Segway’s India business pegs hope on tech-savvy Modi  Full Article 

Power Outage

Power Outage

Mumbai hit by power cuts  Full Article 

Commodities

Commodities

Gold imports, premiums to jump on festive demand - top refiner  Full Article 

Economic Worries

Economic Worries

Pakistan's promises to IMF in doubt as protests sap economy   Full Article 

Islamic Finance

Islamic Finance

Basel III deposit challenge looms over Islamic banks   Full Article 

Antitrust Probes

Antitrust Probes

U.S. business lobby says concerned China antitrust probes unfair.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage