The German economy expanded at its slowest pace in almost a decade last year, according to the Federal Statistics Office. German GDP rose by 0.2pc in 2002, the office said this morning, down from 0.6pc in 2001. That marks the slowest growth for the two trillion euro economy since 1993, when it contracted by 1.1pc. The office said exports and government consumption expenditure grew last year, but that this could not offset a decline in consumer spending. Export growth, which helped to save the economy from contraction, could slow this year as the appreciation of the euro makes German goods more expensive outside the eurozone.
The sluggish growth has increased unemployment and pushed the budget deficit above the limits set by the European Union. The average number of jobless rose by 200,000 to 4.06 million last year, while the deficit ballooned to 3.7pc of GDP. The European Commission has ordered the government to begin implementing measures to lower the deficit by May. The government is expected to make some progress, although there are questions over whether it can do enough to get it under the EU's limit of 3pc of GDP by the end of 2003. //www.fxcentre.com