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Germany to escape recession, return to growth path: central bank

business Updated: Feb 18, 2013 22:24 IST

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Germany, Europe’s biggest economy, will avoid the recession that has engulfed many of its partners in the region and return to growth in the first quarter of 2013, the Bundesbank said on Monday.

“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 report.

German GDP shrank 0.6% in the last quarter of 2012, as weak demand in other eurozone countries hurt exports.

Were its economy to decline in this quarter, Germany would technically be in recession, defined as two straight quarters of economic contraction.

But the Bundesbank joins other economic experts and observers who believe last year’s 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.

While Germany fared much better than its partners in the long-running debt crisis, it has not been able to escape completely unscathed and growth slowed through 2012.

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

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

Meanwhile, the 7-nation eurozone slid deeper into recession in the fourth quarter of 2012, when the region’s economy shrank 0.6% after contracting 0.1% in the prior quarter.

But in Germany, at least, experts believe the economy is already back on growth path.