Germany's economy, Europe's largest, grew at the slowest pace in more than a year in the third quarter as export demand cooled. Gross domestic product, the value of all goods and services, grew 0.1 percent from the previous three months, when it expanded a revised 0.4 percent, the Federal Statistics Office in Wiesbaden said today. Economists expected a rate of 0.3 percent, according to the median of 44 forecast in a Bloomberg survey. Germany doesn't publish annualized figures.
Exports, which fueled German growth for the past year, are cooling as the global economy slows and the euro's appreciation to a record makes German good more expensive abroad. A recovery in domestic demand is held back as oil costs near $50 erode disposable income and companies including General Motors Corp. announce job cuts in Europe. ``There's one huge risk in the form of the dollar depreciation that could make next year another disappointing year for growth,'' said Andrew Bosomworth, a Munich-based fund manager for Pacific Investment Management Co., which oversees about $400 billion in assets. German investor confidence dropped to the lowest in almost two years in November. European Central Bank President Jean-Claude Trichet on Nov. 8 said the euro's recent gains are not welcome. The euro yesterday rose above $1.30 for the first time since its introduction in 1999, after a government report showed the U.S. trade deficit was the third-widest on record in September. The euro pared gains since then, falling to $1.2889 at 7:58 a.m. in Frankfurt.
Investment Fuels Growth
Exports dropped in the third quarter from the previous three months while imports rose, the Federal Statistics Office said today. Investment in equipment increased and companies increased inventories, the report showed. Germany's economy accounts for about one-third of the 12 nations sharing the euro and is the first of the region's five largest economies to report third-quarter GDP. The European Union will publish its growth estimate in Luxembourg tomorrow. The Netherlands probably returned to growth last quarter, helped by stronger exports. GDP may have expanded 0.4 percent after shrinking 0.1 percent in the second quarter, according to the median of five forecasts in a Bloomberg survey of economists. The Dutch statistics office will publish the report at 9:30 a.m. Spain, the euro region's fourth-largest economy, will for the first time publish an early estimate for growth at 9 a.m. today. Growth in the euro region as a whole probably slowed to a 0.4 percent quarterly rate from 0.5 percent, economists surveyed by Bloomberg expect tomorrow's report to show.
Oil Risk
Crude oil prices have retreated from a record $55.67 reached on Oct. 25, to $48.05 per barrel at 11:31 a.m. in New York yesterday. That's still 55 percent higher than a year ago. ``Risk number one for the German economy is the price of oil,'' said Anton Boerner, president of the Berlin-based BGA German exporters and wholesalers group. ``It looks like the world is going to have to live with these prices, and that's contractive for the economy.'' The U.S. economy picked up pace in the third quarter, expanding 0.9 percent from the previous three months, when it grew 0.8 percent. Japan's economic growth probably accelerated to 0.5 percent from 0.3 percent, economists surveyed by Bloomberg expect a report on Nov. 12 to show.
Fed Raises Rates
The U.S. Federal yesterday raised the benchmark U.S. interest rate for a fourth straight time and restated a plan to carry out further increases at a ``measured'' pace. The ECB has kept its main lending rate at a six-decade low of 2 percent since June last year, ignoring rate increases by the Fed and the Bank of England, as it tries to support investment and consumption in the $9 trillion economy. Investors expect the bank will wait at least until the first quarter of next year before it raises borrowing costs, interest rate futures trading shows. The yield on the three-month Euribor contract for March settlement was 2.31 percent. The June contract yielded 2.42 percent. The contracts settle to the three-month euro area inter-bank lending rate for the euro, which has averaged 15 basis points more than the ECB's key rate since the currency's start in 1999. That rate was 2.17 percent. ///www.bloomberg.com