BERLIN: Strong domestic demand and a buoyant labor market kept Europe’s largest economy humming last year, official data showed Thursday, but economists warn that headwinds are growing in light of weaker growth in China and increased geopolitical tensions.
Germany’s gross domestic product expanded 1.7% in 2015 from the year earlier, in inflation-adjusted terms, up from 1.6% in 2014. The outcome is in line with the expectations of the German government and the Bundesbank.
But preliminary GDP data for the fourth-quarter signaled a slight loss in momentum in the second half of the year. Germany’s GDP expanded around 0.25% in the final quarter of 2015 from the previous period, a statistician at the Federal Statistical Office said at a news conference Thursday. The announcement comes ahead of the official publication of fourth-quarter GDP numbers on Feb. 12.
By comparison, Germany’s economy grew at quarterly rates of 0.3% and 0.4% in the third and second quarter, respectively.
“Consumption was main driver of growth in 2015,” said Dieter Sarreither, president of Destatis. Total employment in 2015 reached its highest level since the country’s unification and Germany’s GDP, for the first time ever, exceeded the 3 trillion euro mark ($3.3 trillion).
The national budget surplus of 0.5% of GDP, meanwhile, was the biggest since 2000, when the sale of UMTS mobile phone licenses generated an intake of EUR50.8 billion for the government’s coffers, Destatis said.
Nevertheless, economists cautioned that the government has its work cut out as it struggles to accommodate the roughly 1.1 million people–largely from the Middle East, Africa and Afghanistan–who arrived in Germany in search of asylum last year.
The government is also facing uncertainties over the impact of the emissions scandal at car maker Volkswagen AG on Germany’s economy and the U.K.’s referendum on its European Union membership , due to take place before the end of 2017.
“Any serious political development that could jeopardize European integration could weigh on business confidence and investment,” said Holger Schmieding, an economist at Berenberg in London.
Germany’s Chambers of Industry and Commerce, or DIHK, warned that the 2015 growth figure is “more appearance than substance.”
The oil price slump, the weak euro (exchange rate) and low interest rates will conceal the persisting investment weakness only temporarily,” said Martin Wansleben, the DIHK’s managing director.
Destatis said that German household consumption in 2015 grew 1.9%, while government spending jumped 2.8% from 2014, highlighting strong domestic demand. Exports rose 5.4% over this period, while imports increased 5.7%.
The government expects that Germany’s economy will grow by 1.8% this year.
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