" Economic activity in Germany began to pick up sharply towards the
end of 2014.
In the fourth quarter of 2014, gross domestic product (GDP) rose by 0.7%
in real terms.
The Bundesbank attributes this economic upturn to the steep slide in oil
prices and the depreciation of the euro.
Exports rose in the fourth quarter by 1¼% in seasonally adjusted terms
compared with the preceding three months.
Domestic demand provided an especially strong stimulus.
"Against the backdrop of very upbeat income expectations, energy
price-related purchasing power gains and strong consumer confidence, private
consumption has become the immediate mainstay of the cyclical upturn", the
Bundesbank's Monthly Report suggests.
GDP expanded in 2014 as a whole by 1.6%, which is even more than
the Federal Statistical Office assumed in its initial January estimate.
The
Bundesbank believes that the German economy will continue to benefit from the current
economic upturn going forward.
While the Bundesbank's economists do not expect the financial fillip
given to households by falling energy prices to generate long-term growth
stimuli, consumers were evidently quick to take advantage of the unexpected
boost to their spending power during the Christmas trading period.
A further substantial one-off
effect is likely during the first quarter as many homeowners seize the chance
to replenish their stocks of heating oil at very low prices.
In addition, the Bundesbank anticipates that the distinct fall in the
euro's external value will provide German exporters with greater sales
opportunities in markets outside of the euro area, which will have a gradual
and incremental impact.
Current surveys, says the Monthly Report, indicate that, since the
rebound in sentiment in November, not only export-oriented enterprises but also
firms focused on the domestic market are taking a more optimistic view of the
business outlook.
The Monthly Report also considers the monetary policy of the ECB Governing
Council and examines the Extended Asset Purchase Programme (EAPP) adopted on 22
January 2015. In addition, the Bundesbank's economists outline monetary
developments in the euro area and assess German banks' business in the
fourth-quarter.
Another key topic in the Monthly Report is German public finances, which
developed favourably again in 2014, above all thanks to lower interest
expenditure."
Source: Deutsche Bundesbank
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