Wirtschaftswunder: German Economy Eclipses Pre-Crisis Levels
The German economy grew by a surprising 1.5 percent in the first quarter of 2011 and recorded its largest year-on-year growth since reunification. But the biggest European surprise was further south -- even the Greek economy is growing.
A worker in the German steel industry. Much of the GDP growth was pinned to domestic construction and consumption.
Economic crisis? What economic crisis? For Germany, at least, it would appear that the dark days of 2008 and 2009 are now history. According to numbers released on Friday by the Federal Statistics Office, the German economy grew by a surprising 1.5 percent in the first quarter of 2011 -- and the country's economic output has now exceeded the pre-crisis level of early 2008.
In comparison with the first quarter of 2010, the economic expansion was the largest year-on-year growth since reunification -- a plus of 5.2 percent. In the calendar year of 2010, the German economy grew by 3.6 percent.
Even more promising, the growth was not fueled entirely by exports. The Federal Statistics Office pointed to investments in the industrial and construction sectors as propelling growth. Domestic consumption, long an Achilles heel of the German economy, also drove expansion.
"The numbers prove that the German economy is gaining momentum again," said newly-minted Economy Minister Philipp Rösler in a Friday statement. "Germany is the economic engine among industrial nations, and not just in Europe."
To be sure, German exports continue to boom. Figures released earlier this week showed exports reached 98.3 billion ($140.5 billion) in March, their highest monthly figure since records starting being kept in 1950. Germany is the world's second largest exporter, behind China.
Continuing Quick Pace
Some observers were optimistic that growth would continue at a quick pace.
Wolfgang Franz, the chairman of the German Council of Economic Experts, has estimated that the German economy could grow "with a little luck" by 3.0 percent this year. "We have very quickly come out of the crisis of 2009 -- unexpectedly fast, and unexpectedly strong. And that will continue this year," he said on the morning news program of the German station ARD.
The euro zone's other leading economy, France, also showed growth in the first quarter, with a 1.0 percent increase in GDP.
Still, the International Monetary Fund (IMF) warned Thursday of a broadening of the euro zone's debt crisis. "In advanced Europe, policy makers need to take steps to restore confidence -- structural reforms, fiscal consolidation, and strengthening of the financial system, most notably in the euro area periphery," Antonio Borges, director of the IMF's European Department said in a statement Thursday.
But when it comes to the ongoing debt crisis facing the common currency union, there was a bright spot on Friday. Despite a massive pile of debt and ongoing doubts about its ability to avoid insolvency, Greece on Friday posted a bit of economic growth of its own. The Greek economy grew by 0.8 percent in the first quarter.
-- with wire reports
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