German Real GDP

January 15, 2015

Real economic activity expanded 1.5% in 2014 following minuscule gains of 0.4% in 2012 and 0.1% in 2013.  Growth last year was led by a 1.1% rise in personal consumption, which accounted for 40% of the overall growth rate.  Business spending on machinery, equipment and construction rose about 3.5% and accounted for 0.5 percentage points (ppts) of growth.  However, changing inventories exerted a 0.3-ppt drag on GDP growth and nearly neutralized a 0.4-ppt positive contribution from net foreign demand.  Imports rose 3.3%, almost as much as the 3.7% rise in exports. 

Considered the healthiest economy in the euro area, German GDP growth over the past fourteen years averaged only 1.0%.  The latest seven years saw real GDP rise just 0.7% per annum on average, half as much as during 2001-07.  By comparison, U.S. real GDP climbed 1.8% per annum over the past 14 years and by 1.2% per year over the last half of that period.  And by further comparison, Japanese real GDP increased 0.7% per year over the past 14 years and by 0.06% per year over the last ten, rounded to the nearest hundredth of a percent.  If Germany slips into chronic deflation as Japan did in the late 1990s, growth conditions could actually get much worse.  Some of each economy’s weakness reflects declining populations.

Copyright 2015, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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