The German economy edged out of recession in the third quarter, growing by 0.2 per cent, as stronger exports outweighed the biggest drop in domestic demand in more than a decade, data showed today.
Exports for Europe's largest economy, surged by 3.2 per cent from the second quarter, the biggest increase since a 5.1 per cent gain in the final quarter of 2000, the Federal Statistics Office said. Imports dropped 1.9 per cent.
But the news on the domestic economy was less encouraging with demand shrinking by 1.6 per cent, the largest decline since one of the same size in the first quarter of 1993. Net trade added 1.8 percentage points to growth but domestic demand sliced off 1.6 points, the office said. There are concerns that the turnaround in the euro's fortunes could scupper demand for German exports.
"Net exports are not likely to be as strong, despite the fact global trade is still growing. I still think the strength of the euro will put downward pressure on exports in coming quarters," said Mr Elwin de Groot, at Fortis Bank.
Germany had been in recession since the final quarter of last year but was expanding again as a global economic recovery spurs demand for German goods. The benchmark DAX stocks index has surged 70 per cent since March.
Chancellor Gerhard Schroeder said in an interview today that "all the indications are showing the economic recovery in Germany has begun". He said he expects annual growth of as much as 2 per cent next year.
Despite the return to growth in the third quarter, Germany is still in danger of posting its first full year of contraction since 1993, economists have said.
Germany's influential BDI industry federation warned yesterday that the euro's rise to record levels against the US dollar may hurt German exporters.