Strikingly, net exports contributed 1.1 percentage points to GDP growth, meaning that the domestic economy contracted slightly. With growth of 4.1%, real German exports are likely to have outstripped world trade growth (+2 to 3%). This means that the European debt crisis is not the sole factor behind the sputtering economic engine. The 4.4% slide in machinery and equipment investment highlights pronounced investment weakness. Although the uncertainty caused by the debt crisis doubtless played a major part in companies’ reluctance to invest, the question remains why – given healthy earnings, extremely low interest rates and much international confidence in the country’s competitiveness – companies are not investing more at home. Hence, priority must be given to improving investment conditions.
Encouragingly, business expectations brightened again somewhat at the end of 2012. There are growing signs that foreign demand is picking up on the back of an upturn in the world economy. This raises hopes that investment demand will recover again in the course of 2013. With income trends fairly healthy, real private consumption could increase by more than 1% in 2013 (2012: +0.8%). All in all, therefore, the slight contraction in GDP at the end of 2012 is no reason for pessimism regarding 2013. According to our estimates, at 1.2% the German economy is likely to grow somewhat more strongly again in 2013 than in 2012.