Frankfurt, Germany (4E) – Germany’s central bank said that the country will avoid recession and return to economic expansion in the first quarter of the year.
Germany would technically be in a recession should the economy shrink again in the current quarter based on the definition of two quarters of contraction.
German gross domestic product (GDP) contracted in the fourth quarter at a pace that surprised economists after shrinking 0.6 per cent from the previous three months as exports slumped and companies postponed spending. In January, signs are beginning to emerge that the economy has rebounded from its slump boosted by improving business and investor confidence and unexpected drop in unemployment.
In the monthly report by the Frankfurt-based Bundesbank released on Monday, it noted the improving economic outlook for Germany which has risen quickly in the last three months. The bank also added that based on its current perspective, an expansion of the overall economy is expected in the first quarter of 2013.
Germany’s GDP slowed for the entire 2012, growing by just 0.5 per cent in the first quarter, 0.3 per cent in the second quarter and 0.2 per cent in the third quarter.
In December, the central bank lowered its forecast for the current year to 0.4 per cent growth. That figures is still higher compared to the European Central Bank (ECB) projection for the entire euro zone economy, which is expected to shrink by 0.3 per cent and will only begin to recover later in the year.