Germany’s economy sustained its momentum at the end of 2015, showing resilience amid an emerging market slowdown that’s heightened concerns about global growth and sent equities plunging this year.
Gross domestic product rose a seasonally-adjusted 0.3 per cent in the three months ended December 31st, matching the rate of the previous quarter, the Federal Statistics Office in Wiesbaden said on Friday. That's in line with the economist estimates in a Bloomberg survey.
A report last month showed that the economy expanded a seasonally adjusted 1.7 per cent in the full-year 2015.
German business confidence has fallen for the past two months, and a rout in global stocks has pushed Europe’s benchmark gauge to its lowest since 2013.
Even with central banks around the world cutting interest rates and the European Central Bank considering adding to its stimulus, the heightened uncertainty is weighing on the prospects for Germany, the euro area's largest economy.
“The German economy ended the year with a decent growth performance,” said Carsten Brzeski, chief economist at ING-Diba in Frankfurt.
"Looking ahead, the year 2016 could be more challenging" as "on top of the well-known risk factors like slowing China and emerging markets or a still-struggling eurozone, low oil prices and the possible weakness of the US economy could give the German economy a hard time."
Fourth-quarter growth was driven by domestic demand, with government spending increasing “significantly” in response to the refugee crisis, according to the report.
Investment, particularly construction, also improved while trade was a drag on the economy as exports slowed more than imports.
Domestic demand was supported by the slump in oil and inflation that stayed weak despite the ECB’s expanded stimulus program.
German unemployment is at a record low and real wages rose 2.5 per cent in 2015, the strongest increase since 2008.
At the same time, industry is showing signs of slowing, with production plunging 1.2 per cent in December and a manufacturing gauge falling in January.
Even so, "the significant increase in orders from within the country and abroad, which is in line with an improved business outlook and the latest recovery in export expectations, signals that manufacturing is about to pick up pace," the Bundesbank said in January.
"Germany is not as dependent on global demand as it used to be," Johannes Mayr, senior economist at Bayerische Landesbank in Munich, said ahead of the report.
“Private consumption is now the most important driver of economic growth in Germany, and this is important news because it makes the German economy much more robust against problems in the global economy.”
Germany’s economic upswing is key for the continuation of the euro-area recovery amid slower global growth.
Growth figures for the 19-nation currency bloc are scheduled to be published by Eurostat at 11 am in Luxembourg, with economists in a separate Bloomberg survey predicting expansion held at 0.3 per cent.
France, the region's second-largest economy, said in January that expansion slowed to 0.2 per cent. Italy, the region's third-largest economy, will report GDP data at 10 am.
