Germany records record growth

Germany has reinforced its position as the powerhouse of Europe by recording its strongest annual economic growth figures since the country’s reunification in 1990

Expansion in exports of 14.2% helped Germany’s economy grow 3.6%, according to figures published today by the Federal Statistical Office.

However, the FSO said provisional calculations showed public sector net borrowing of EUR88.6 billion, the highest figure on record.

At 3.5% of GDP, it will mean Germany breaches the 3% ceiling mandated by the Maastricht Treaty for the first time in five years.

The FSO said most economic growth occurred in spring and summer, with export growth marginally outpacing a 13% expansion in imports.

This marks a significant turnaround from 2009, when Germany’s economy contracted 4.7% in its most severe recession since World War II.

Last year’s renewed year-on-year, price-adjusted growth easily outpaced most years since 2000, rivaled only by 2000 (3.2%) and by 2006 (3.4%).

The FSO noted the expansion was fuelled not just by exports – though still “a pillar of economic development”, in its view – but also by domestic demand.

Household spending grew 0.5%, while government consumption increased by 2.2%.

Germany cut joblessness by 0.5% to register record high employment.

Jobs lost mainly in heavy industry including energy, transport and communications were more than offset by extra positions elsewhere, including in the financial, real estate, and construction sectors.

Gross wages and salaries increased by 2.7%, reflecting what the FSO called “the massive reduction of short-time work, and collectively agreed pay rises”.

All eyes will be on the FSO again on 24 February, when it releases more detailed analysis of German economic performance.

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