A wintry gloom has spread across Germany this morning. I’ve just got back from snowy Wiesbaden - half an hour by Autobahn from Frankfurt - where the country’s statistical office was briefing on 2009′s gross domestic product. Strangely, it produces full-year results before giving a fourth quarter number, but officials there said they believe growth stagnated in the final three months of 2009.
That took economists by surprise, if only because forward looking business optimism surveys have pointed to further growth (building on the third quarter’s 0.7 per cent rise). The statisticians’ comments were “not consistent with a lot of other evidence,” Dirk Schumacher, at Goldman Sachs in Frankfurt, told me. The officials wouldn’t say anything more but my guess would be that the ending of subsidies for car purchases played a role.
The other thing that stuck me was how remarkably stable the German economy remained last year. True, GDP shrank by 5 per cent – more than five times greater than the previous-largest post-war dip, in 1975. But, incredibly, the average number in employment fell by only 0.1 per cent compared with the previous year. Inflationary pressures were also barely changed, which suggests there was never any serious risk of deflation in Europe’s largest economy. Prices were on average only 0.4 per cent higher than in 2008 but that was largely because of falls in energy prices. “Core” inflation, excluding energy and seasonally-dependent foods, was 1.1 per cent – in line with the average of the past ten years.
