German Economy Dropped More than Predicted During Fourth Quarter image

During the fourth quarter economy in Germany dropped lower than analysts’ forecast, as exports declined.

During the fourth quarter, gross domestic product dropped 0.6% from the third quarter, when it saw an increase of 0.2%, according to the Federal Statistics Office in Wiesbaden. This number is with 0.1% higher than analysts’ forecast of0.5 %. France and Italy also saw their economies drop more than expected with GDP down 0.3% and 0.9% during the same period.

Although Germany’s Bundesbank cut its 2013 growth target in December to 0.4%, due to the economic crisis in Europe, there are still hopes and signs that the country is recovering from the fourth quarter drop, with investor confidence and business increasing more than expected in January.

“The figures released in individual member states so far suggest that euro-zone GDP growth is likely to have fallen sharply in the fourth quarter,” said Nick Kounis, head of macro research at ABN Amro Bank NV in Amsterdam.

The main cause for the drop in Germany’s economy was the declining exports, added to less construction and company investment. The Organization for Economic Cooperation and Development expects global growth to increase with 3.4% this year, mainly due to new investments.