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Foreign Trade, Capital Investment Drive German Economy in Q4

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Foreign Trade, Capital Investment Drive German Economy in Q4

The German economy expanded at a moderate pace last quarter, thanks to an improving export market and strong capital investment.

Europe’s largest economy expanded 0.4 percent in the fourth quarter of last year, preliminary estimates from the Federal Statistics Office showed today. The rate of expansion, which exceeded forecasts by 0.1 percentage point, follows a gain of 0.3 percent in the third quarter. Annually, German gross domestic product expanded at a rate of 1.3 percent, in line with forecasts.

Domestic consumption, the lynchpin of German recovery last year, moderated in the fourth quarter. While government final consumption expenditure remained consistent with the previous quarter, household final consumption was slightly lower. Positive contributions were also made by capital investments, which improved markedly over the previous quarter.

Somewhat surprisingly, the nation’s struggling export market improved, a sign demand was stronger elsewhere in the euro region.

“In a quarter-on-quarter comparison… positive contributions were made mainly by foreign trade,” the Federal Statistics Office wrote in an official statement. “According to provisional calculations, the increase in exports of goods and services was substantially higher than that of imports.”

Weak demand in the Eurozone last year weighed heavily on Germany’s export market. German exports rose only 0.6 percent in 2013, compared to 3.2 percent a year earlier. Imports, meanwhile, increased 1.3 percent in all of 2013.

In a separate report the European Commission said the Eurozone economy expanded 0.3 percent in the previous quarter, thanks to stronger output in Germany and France. The French economy, which stagnated last quarter, expanded 0.3 percent in final three months of 2013.

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