Germany warded off the threat of recession during the first quarter of 2012, with data released Tuesday showing strong exports driving Europe's biggest economy to post a bigger-than-forecast 0.5 per cent growth rate.
Analysts surveyed by dpa-AFX had expected GDP to come in at 0.2 percent in the first three months of the year, after it contracted by 0.2 percent in the final quarter of 2011. The nation's economy grew by 1.2 percent in the first quarter when compared with the same period in 2011.
"The German economy remains the powerhouse of the eurozone economy," said ING Bank economist Carsten Brzeski, with the country's
solid economic performance also helping the eurozone to escape
recession.
The European Commission said Tuesday that the 17-member currency bloc stagnated during the first three months of the year.
Still, the debt crisis has driven large parts of the economy forged around Europe's common currency into a sharp economic slide as they step up a fierce round of budget austerity aimed at cutting high
deficit-and-debt levels.
As a reminder of the uncertain economic climate surrounding Germany, investor confidence in the country fell for the first time in five months in May as concerns grew about Europe's debt crisis, a
key survey also released Tuesday showed.
The Mannheim-based ZEW economic research institute said its survey, which measures the mood among analysts and institutional investors, dropped by a more-than-forecast 12.6 points
to 10.8 this month.
"Against the backdrop of the sovereign debt crisis in the eurozone, economic risks have risen during the previous weeks according to the financial market experts," said ZEW President Wolfgang Franz.
Releasing the survey, Franz also warned about the economic fallout for the eurozone from the region's austerity drive.
"In view of the recession in some problem countries of the eurozone it is important to pursue austerity measures with sound judgement," he said. "Growth and consolidation do not contradict each other."
His comments come ahead of a summit next week of European leaders that is expected to sign off on a growth pact for Europe to complement its fiscal pact on budget discipline.
For the moment, however, a slew of hard economic data released in
recent weeks from Germany have underlined the rebound in the country's economy since the start of the year, with the nation's export machine a key driving force behind growth.
Some economists think the nation's growth rate could be up to 1 percent this year after the economy expanded by a solid 3 percent in 2011.
The statistics office said last week that the nation's exports
grew by 0.9 percent in March amid strong demand from countries outside Europe, such as the United States and China. Germany is the world's second biggest exporter after China.
Business confidence in Germany hit a nine-month high in April, the Munich-based Ifo economic research institute said last month.
Economists are also expecting that a pickup in wages after a
protracted period of stagnation combined with a further fall in unemployment will help to boost domestic demand.
But with German shipping about 40 per cent of its total exports
to the eurozone, economists are expecting the slump in parts of the currency bloc economy to eventually catch up with the country.
"The German economy will be affected by the weakness of demand
from eurozone countries," said BNP Paribas economist Catherine Stephan.
