German economy rises 3.6% in Y 2010
The German economy saw a strong recovery in Y 2010, as its gross domestic product (GDP) soared 3.6%, the largest annual growth rate since the country's reunification in Y 1990, preliminary official data showed Wednesday.
What was striking in 2010 was the fact that economic growth was not only based on foreign trade, but also on domestic demand, the Wiesbaden-based Federal Statistical Office said in a report.
At current prices, Germany's GDP in Y 2010 grew to 2.498T Euros (US$3.247T), and its gross national income reached 2.527T Euros (US$3.277T), the office said.
Hit by the Global financial crisis, Germany's economy shrank 4.7% in Y 2009 in its worst recession in post-war history.
However, Europe's largest economy posted a solid recovery since spring, largely bolstered by soaring foreign orders and an optimistic mood in domestic markets.
Official data showed foreign trade remained to be a pillar of Germany's economic growth last year, with exports surging 14.2% compared with a 14.3% decline in Y 2009 and imports growing 13%.
The balance of exports and imports contributed 1.1 percentage points to the growth in GDP in Y 2010, the office added.
In domestic markets, sinking unemployment boosted consumer confidence and the growth. Official data showed the number of jobless declined by 297,000, or 9.2% to 2.9 million in Y 2010, well below the psych mark of 3 million.
Moreover, the economic upswing encouraged employers to extend the working time of their factories and firms. The number of hours worked by each person increased 5.7% Y 2010, compared with one year earlier, when there was a particularly strong decline of 6.8 percent, the office said.
In price-adjusted terms, household spending jumped 0.5%, while government expenditures registered a much higher 2.2% growth, the report said.
On investment, gross fixed capital formation in machinery and equipment, Germany's world's leading industry, grew by a robust 9.4%, which made up for part of the decline in Y 2009 and pushed the increase in overall fixed capital formation to an impressive 10.4% the office said.
However, the office noted that Germany's budget deficit reached 3.5% of the GDP in Y 2010 on provisional calculations, exceeding the 3% limit, set by the European Monetary Union for all EuroZone countries, for the 1st time in 5 yrs.
The impact of the economic and financial crisis was clearly reflected again in the government budgets, the office said. The general government net borrowing amounted to 88.6B Euros (US$114B), the highest value since the launch of the Euro.
The German government has pledged to plug the deficit to below 3% by Y 2013.
On February 15, the office is set to publish the revised results of GDP for Y 2010.-Paul A. Ebeling, Jnr. www.livetradingnews.com