Germany's economy grew at 1.5% in 2014 and while this was its best performance in 3 years, it weakened after a strong start, expanding only by 0.1% in the third quarter - Destatis, the national statistics office, has yet to publish separate fourth quarter data. The economy only grew by 0.1% in 2013.
"Obviously, the German economy turned out to be strong in a difficult global economic environment, benefiting especially from a strong domestic demand," said Roderich Egeler, president of Destatis, at a press conference in Berlin today. The economic situation had stabilised towards the end of 2014, following a dynamic start into the year and the subsequent period of weakness last summer.
Destatis said that at the end of the year, general government – comprising the central, state and local government and social security funds – recorded the second highest net lending since German unification. According to provisional calculations, it amounted to €11.9bn. Central and local government and social security funds achieved a surplus, while state government recorded a slight net borrowing.
When measured as a percentage of the gross domestic product at current prices, this is a +0.4% surplus ratio of general government. For the third consecutive year, general government had a balanced budget according to the national accounting method.
Final consumption expenditure was the main driving force for German economic growth. Household final consumption expenditure rose a price-adjusted 1.1%, while government final consumption expenditure was up 1.0%.
Capital formation increased, too. Gross fixed capital formation in machinery and equipment by businesses and general government together was up 3.7% on a year earlier. Also, price-adjusted gross fixed capital formation in construction increased considerably by 3.4%.
Gross fixed capital formation in other products – which includes expenditure on research and development since the major revision of national accounts of summer 2014 – was 1.2% higher than a year earlier.
Destatis said that despite a continuing difficult external economic environment, German foreign trade was slightly more dynamic on an annual average in 2014.
German exports of goods and services were up a price-adjusted 3.7% on 2013. However, imports rose almost as strongly (+3.3%). The balance of exports and imports thus made a relatively small contribution of +0.4 percentage points to GDP growth in 2014.