The German economy's transformation from spluttering Trabant to purring Mercedes is complete.
Although third-quarter gross domestic product growth of 0.7% was slightly below consensus, that was made up for by revisions higher for the first half of the year; the country is on track to grow 3.5% or more in 2010, its best performance since reunification and far above the 1.5% average in the precrisis decade. Crucially, domestic demand, both private and public, is now making an equal contribution to growth with investment and exports, suggesting the economy is rebalancing naturally, despite misplaced criticism from some trading partners.
Germany's GDP has now recovered more than 70% of the 6.6% fall in output as a result of the recession, J.P. Morgan Chase & Co. notes. Both companies and individuals are upbeat. With German bond yields so low and no fiscal concerns, the cost of borrowing is cheap. The latest survey by the German Chambers of Industry and Commerce showed a positive balance of 14% of companies planning to increase investment, far above the long-run average of minus 8% and close to a record; a similar picture emerges for hiring intentions. Unemployment has fallen below three million, its lowest level since 1992.
Friday, November 12, 2010
The German Economy is Recovered
From the WSJ: