German Economy Grew Less Than Expected 0.2% in Fourth Quarter
Germany's economy, Europe's largest, grew less than expected last quarter from the previous three-month period as imports rose more than exports following the euro's appreciation. German gross domestic product expanded 0.2 percent, the same rate as in the third quarter, the Federal Statistics Office in Wiesbaden said. Economists expected an increase of 0.3 percent, according to the median of 34 forecasts in a Bloomberg News survey.
Germany's economy, Europe's biggest, contracted 0.1 percent in 2003 as consumer spending dropped, the statistics office said last month. The government predicts growth of 1.5 percent to 2 percent this year. `Exports alone cannot solve the economic problems in Germany,'' said Gunter Schall, economist at the BDI industry association, whose 107,000 members include DaimlerChrysler AG and Siemens AG. ``The question is will companies use their income from exports to invest in Germany? I am skeptical about that.'' Household spending, which accounts for more than half of German GDP, is still a drag on the economy. German retail sales fell for a second month in December, and unemployment rose a seasonally adjusted 28,000 in January, the first increase since May. European consumer confidence stagnated last month.
The ECB has ignored calls by business leaders including BDI head Michael Rogowski to lower interest rates to stem the euro's climb. The euro rose to $1.2899 last month, the highest since its introduction five years ago, and was trading at $1.2831 at 7:49 a.m. in Frankfurt.
Policy makers last Thursday left the main lending rate unchanged at a half-century low of 2 percent and board member Gertrude Tumpel-Gugerell told business journalists Tuesday a rate cut ``is currently not a topic.'' ECB officials next meet to set interest rates on March 4. Investors increasingly expects borrowing costs to remain unchanged until at least the middle of the year, interest rate futures contracts show.
quote.bloomberg.com
===============================================
What is BDI?
Mish |
