Germany's Federal Statistics Office confirmed today that Europe's largest economy contracted slightly at the end of 2004.
The Office said gross domestic product (GDP) shrank 0.2 per cent in the fourth quarter of 2004 compared with the previous three months. From a year earlier, GDP grew by 1.5 per cent, the office said, also confirming preliminary data published February 15th.
"The drop in economic output compared with the previous quarter was marked by a decline in domestic demand . . . which was only partly offset by an increase in net trade," the office said.
A breakdown showed the decline was mainly due to a drop in public spending and weaker corporate investment in plant and equipment after a sharp rise in the previous three months.
Efforts by companies to reduce inventories built up in earlier months also subtracted 0.8 percentage points from growth, the Office said.
But analysts drew encouragement from news that private consumption, which accounts for around 60 per cent of GDP, rose 0.2 per cent in the final quarter.
Construction investment was positive for the first time since the second quarter of 2003.
The Statistics Office left unchanged its estimate of full year 2004 growth at 1.6 per cent, but said it had revised its estimate of Germany's budget deficit down to 3.7 per cent of GDP from an initial 3.9 per cent.