The article originally appeared at German Economic News. Translated for RI by Anita Zalaldinova.
The German economy feels the impact of the euro crisis and the anti-Russian sanctions. The gross domestic product (GDP) rose from January to March compared to the previous quarter by 0.3 percent, the Federal Statistics Office announced in Wiesbaden on Wednesday.
The major problem for Germany is the EU sanctions against Russia. The Russian ambassador to Germany, Vladimir Grinin, said the German Economic News that the sanctions hurt massively both Germany and Russia. Grinin explained in bare figures:
“German investment agencies registered in the first half of 2015 not a single Greenfield-project of Russian investors in Germany. It should not be forgotten that Russia, being a non-member of the EU, is the largest European investor country, after Switzerland, of such projects in Germany – from 2008 to 2013 63 projects were launched. This decline came after a fairly active expansion of Russian capital in the German market which took place in fact until 2014. In 2014 the German exports to Russia nosedived dramatically – by 18.1 percent or 6.5 billion euros. In absolute terms, last year German goods and services worth €29.3 billion were sold in Russia, compared to €35.8 billion in 2013. In 2014 the trade turnover between Russia and Germany sank by 12.09 percent to 67.7 billion euros (against 77.03 billion in 2013). In early 2015 this descending trend has continued. In January-February this year the decline in German exports reached a new low with 34 percent.”
At the end of 2014 the German economy, compared to the previous quarter, increased by 0.7 percent. And expectations of bank economists, who had expected an increase of 0.5 percent, were clearly wrong.
The key growth driver was again domestic consumption. Households increased their spending as, on the one hand, savings in view of the measly interest rates are unattractive, and they, due to rising wages and record employment, have more money in their pockets.
Positive impulses also came from government consumption and investment. “Investments in both in construction and technical equipment were considerably more than in the fourth quarter of 2014,” the statistician said.
By contrast, net exports have slowed down growth – the difference between the development of exports and imports. According to preliminary calculations, more goods and services have been exported than at the end of 2014. But import to Germany has reportedly risen much stronger.
Year on year, economic growth has slowed down as well: the price-adjusted GDP grew in the first quarter of 2015 by 1.1 percent against the first quarter of 2014. From October to December of 2014, the GDP rose by 1.6 percent.