The German economy expanded by 1.7% in 2004, its strongest performance in four years, as booming exports offset weak domestic demand.
Federal statistics office Destatis calculated that German gross domestic product, the biggest in the 12-country euro zone, grew by 1.7% in real or price-adjusted terms, the strongest increase in GDP since 2000. The German government had been forecasting growth of 1.8% for 2004 after a 0.1% contraction in 2003.
Exports were the main driving force behind growth, offsetting persistently weak household consumption which fell by 0.3%, the statisticians calculated. Exports powered ahead by 8.2%, while imports rose by 5.7%, the figures showed.
But calendar effects also helped enhance Germany's economic performance. A large number of public holidays fell on weekends last year, meaning that there were more working days available. This factor alone added 0.5 percentage points to growth, Destatis said.
Adjusted for calendar effects, German GDP expanded by 1.1% in 2004. State expenditure increased by 0.4% in 2004 and investment in equipment rose by 1.2%.
Regarding the state of public finances, Germany chalked up a public deficit equivalent to 3.9% of GDP last year, well in excess of a euro zone limit of 3%, Destatis estimated.
It is the third year in a row that the German deficit ratio has exceeded the 3% limit after it amounted to 3.8% in 2003 and 3.7% in 2002. Under the terms of the European Union's Stability and Growth Pact, euro zone countries are not allowed to run up public deficits in excess of 3% of GDP.
The government has promised to rein in the German deficit below that limit in 2005, but a large majority of economic experts are sceptical it will be possible.
