German economy grows touch more than expected in 2022

The German economy grew a touch more than expected last year but growth likely stagnated in the final quarter, according to an initial estimate released on Friday by Destatis.

The economy grew 1.9% on the year in 2022, down from 2.6% in 2021 and versus expectations of 1.8% growth.

Dr Ruth Brand, president of the Federal Statistical Office, said: "In 2022, the overall economic situation in Germany was affected by the consequences of the war in Ukraine and the extremely high energy price increases.

"There also were serious material shortages and delivery bottlenecks, massively rising prices, for example of food, skilled labour shortages, and the continuing though fading Covid-19 pandemic. Although these difficult conditions persist, the German economy as a whole managed to perform well in 2022."

Carsten Brzeski, global head of macro at ING, said this was "definitely not bad for a year with lockdowns and a war".

"However, to put things in perspective: the German economy has only just returned to its size of late 2019. Three years of crisis have not passed by unnoticed."

He said the most important element of this annual growth rate is what it means for fourth quarter growth.

"According to the statistical office, the German economy stagnated in the fourth quarter, after growing by 0.4% quarter-on-quarter in the third quarter. In the past, these implied estimates for the final quarter were very accurate.

"However, at the current juncture, the economic performance in December could have been more volatile and disruptive than in the past; think of the weather impact, longer Christmas breaks and stronger-than-expected impact from the energy crisis on consumption and production. We think that this estimate for the fourth quarter will still be revised somewhat."