BMWi: The economic situation in Germany in January 2014

13 January 2014

The German economy is returning to growth in the new year, following a weak winter semester in 2012-13.

• The global economic outlook is improving; external economic stimuli for Germany are becoming more apparent again.
• The eurozone is only emerging hesitantly from the recession. Further stabilisation with a fresh stimulus for growth and employment is needed.
• Following a weak start into the fourth quarter, the goods-producing industry is registering a clear increase in new orders and a positive development in the business climate.
• Gainful activity is increasing (seasonally adjusted), whilst the reduction in unemployment is faltering, not least due to the lack of skills on the part of the unemployed. A fresh stimulus is required here.

The German economy remains on a moderate growth trajectory. The latest indicators suggest that overall economic output is likely to have picked up in the final quarter of the year. In view of the weak winter semester, however, the gross domestic product for 2013 as a whole will only be slightly higher than that of the preceding year. The growth was driven by the domestic economy. Employment reached a record level last year. This year, the economy is likely to pick up speed somewhat. This is suggested not least by the indicators of sentiment, which clearly improved in the course of the second half of 2013.

In the course of last year, the global economic environment improved appreciably. The level of uncertainty caused by the financial crisis and the euro debt crisis diminished. For example, the Economic Policy Uncertainty Index has returned in many places to its pre-crisis level, albeit not for Europe as a whole. In Europe in particular, but also in some emerging economies, structural challenges still need to be addressed. The necessary adjustment processes will continue to dampen economic development for the foreseeable future. Initially, therefore, the global economy will remain less dynamic than it was before the crisis. 

The gradual increase in the stimulus from the world economy is boosting German exports of goods. Following a further slight expansion in November (+0.3 per cent), the nominal export trend is currently pointing slightly upwards. In contrast, nominal imports declined slightly in November (-1.1 per cent), thus continuing the sidewards trend that has been seen for months. The fall in import prices is resulting in lower import figures. As a result, the balance of trade recorded a surplus of 18.1 billion in November, €1.2 billion higher than a year earlier. However, the competitiveness of the German economy in terms of price was roughly three percentage points lower in November than it had been a year before.

The development on the labour market towards the end of the year was encouraging. In seasonally adjusted terms, the increase in employment is continuing, and unlike in the preceding months there was a fall in the level of unemployment. At the same time, the development of unemployment in December was helped by a somewhat greater impact of active labour-market policy measures. In view of the incipient economic revival, the outlook for the labour market remains positive.

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