German economic growth slowed on a year-on-year basis in 2011 as the sovereign debt crisis dampened exports.
Gross domestic product increased 3 per cent after gaining 3.7 per cent in 2010, the most since German reunification two decades ago, the Federal Statistics Office in Wiesbaden said today. The figure was in line with expectations.
Germany's budget deficit amounted to 1 per cent 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 per cent in the year, while government spending rose 1.2 per cent. Investment in plant and machinery gained 8.3 per cent.
Net trade contributed 0.8 percentage points to growth, with exports up 8.2 per cent and imports gaining 7.2 per cent. In 2010 exports increased 13.7 per cent.
Continental AG, Europe's second-biggest car-parts maker, said on December 29th 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, the world's biggest provider of kidney dialysis, on December 20th 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 in London. "There's a constant tug-of-war between the positive of domestic demand and the negative drag of the sovereign debt crisis."
Bloomberg