German economy picked up speed in 2015

BERLIN – The German economy, Europe’s biggest, grew by 1.7 per cent in 2015, authorities said Thursday, a slight improvement from the previous year that was fueled mainly by domestic demand.

The Federal Statistical Office offered a rough initial estimate that the economy grew by about 0.25 per cent in the year’s fourth quarter compared with the previous three-month period. Germany issues a preliminary full-year figure before giving official fourth-quarter numbers, which are scheduled for release next month.

Full-year growth in 2015 was in line with government forecasts and slightly faster than the previous year’s 1.6 per cent, the Statistical Office said.

“The most important growth motor was domestic consumption,” Statistical Office president Diether Sarreither told reporters.

Exports grew 5.4 per cent, faster than the previous year’s 4 per cent. However, they were outpaced by imports, whose growth accelerated to 5.7 per cent from 3.7 per cent.

That meant that foreign trade made a “relatively small contribution” of only 0.2 percentage points to growth, the Statistical Office said.

Household spending was up 1.9 per cent, roughly double the previous year’s figure. Households’ disposable income increased 2.8 per cent.

“All in all, the German economy has once again defied many external headwinds and performed another solid growth year in 2015,” ING-DiBa economist Carsten Brzeski said.

“The year 2015 clearly marks an important step in the rebalancing of the German economy, as private consumption turned out to be an important growth driver,” he said of the traditionally export-heavy economy.

Though Statistical Office official Norbert Raeth estimated that fourth-quarter growth came in at about a quarter of a per cent, he cautioned that only around half of the data the office uses to calculate final quarterly readings are available so far.

The economy expanded by 0.3 per cent in the third quarter.