Germany will 'escape recession'

Germany, Europe's biggest economy, will avoid recession and return to growth in the first quarter of this year after activity contracted at the end of last year, the Bundesbank said yesterday.

"As it currently looks, a plus in economic output can be expected in the first quarter of this year," the German central bank said in its February monthly report.

German GDP shrank by 0.6% in the last quarter of 2012.

Were it to decline again in the current quarter, Germany would technically be in recession.

But the Bundesbank joins other economic experts and observers who believe the dip in growth will prove short-lived.

"For the rest of this year, the economy is expected to pick up gradually, even if the external economic environment will provide no trigger for a sharp surge in demand," it wrote.

Germany has since the start of the sovereign debt crisis been the engine room for growth in Europe.

And since the European Union is the largest market for South African-made goods, the stagnation of the eurozone's economy has made life tough for South African firms. Exporters in South Africa are waiting eagerly for signs that Europe's woes have ended.

Although Germany has fared much better than its eurozone partners in the long-running debt crisis, it has not been able to escape completely unscathed and growth slowed throughout 2012 as the recession in much of Europe put the brakes on imports.

German GDP grew 0.5% in the first quarter of 2012, 0.3% in the second quarter and 0.2% in the third quarter.

With the contraction of 0.6% in the fourth quarter, the economy expanded by just 0.7% across the whole of 2012, compared with 3.0% in 2011, according to the latest data by the federal statistics office Destatis.