The "Sick Man Of Europe" Is Back - German Economy Barely Grows In 2013

Tyler Durden's picture

Everyone knows that without the German export-driven growth dynamo, the European economy would quickly wither and disappear into nothingness. Which is why today's report that the German economy grew by just 0.4% last year, its worst performance since the global financial crisis in 2009, with strong domestic demand only partially offsetting the continued negative impact of the euro crisis, should be reason for significant concern to all especially since all the artificial, goalseeked GDP readings from the periphery are just that, and are completely meaningless in the grand scheme of things - should Germany's growth falter, as it clearly has been over the past two years, may as well put the lights out.

For the past three years we have been hearing how Germany is about to turn the corner and its GDP will surge... any minute now. Instead what happened was that growth slowed to 0.7% in 2012 and the economy barely skirted a recession at the start of 2013. Luckily, soon thereafter Europe revised its GDP definition and all was well, if only for the time being. Still, excluding 2009, when the economy shrank by 5.1 percent, its biggest contraction of the post-war era, 2013 proved Germany's weakest since 2003 when it was dubbed the "Sick Man of Europe".

Reuters reminds us that the events of 2003 prompted then-chancellor Gerhard Schroeder to unveil far-reaching reforms of the welfare state, which are now being diluted by the new right-left coalition of Angela Merkel's conservatives and the Social Democrats (SPD).  Investments took 0.1 percent off GDP last year as companies held off on investing due to uncertainty over the euro zone crisis. Foreign trade, which had underpinned growth for the previous three years, subtracted 0.3 percent. The fact import growth outpaced that of exports could tame criticism of Germany's traditional reliance on exports and suggests it is contributing to recovery among its euro zone trading partners by buying up their products.

Prespun excuses aside, when it comes to Germany, it is all about exports. Recall that net trade accounts for nearly 40% of German GDP - the highest of any developed world economy!

And while the Euro means Germany is competitive within the Eurozone (since the dreaded DEM is no longer around), it still has to export outside the monetary union. Which is what seems to not be happening.

Reuters puts this print in the context of analyst expections: "The preliminary gross domestic product (GDP) estimate from the Federal Statistics Office, released on Wednesday, fell just short of the consensus forecast for a 0.5 percent expansion in a Reuters poll of 18 economists." It adds the following color:

Germany faced international criticism earlier in 2013 for not doing enough to reduce its high trade surpluses. The U.S. administration reprimanded Germany in October in its semi-annual report to Congress for its economic imbalances.


Private and public consumption rose 0.9 and 1.1 percent respectively in 2013, helping domestic demand contribute 0.7 percent to GDP despite the drag from investments.


The private household savings rate dropped to its lowest level since 2001 as low interest rates and a robust labor market encouraged traditionally thrifty Germans to spend.


The public sector budget swung to a slight deficit of 0.1 percent after posting a surplus of 0.1 percent in 2012.


The BGA trade association has said it expects exports, the cornerstone of the Germany economy for decades, to grow by up to 3 percent in 2014.

Good luck: maybe this time will be different and "experts" will finally predict the future. Then again, as we - with the help of the IMF - have been showing, global trade is crashing thanks to global QE where one no longer needs to trade: instead one can simply print whatever "money" one needs...

The happy ending there is absolutely assured.

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spastic_colon's picture

I totally agree with the goalseeked meme.....but I wish I had the last X number of years of my life back waiting for europe to falter

knukles's picture

But wait!  There's more!
All the talking heads are saying that Europe has finally entered a self-sustaining growth period with happy numbers and all's OK with the world.


Occident Mortal's picture

I'm surprised Japan isn't more export led? 


13% seems pretty low, what about all those cars and electronics? Or was that the 80's?

GetZeeGold's picture




Sounds like Germany needs to talk to Paulie....

Oh regional Indian's picture

So which is it? As per Frontrunning headlines...

Boom or bust?

By the way, they are booming here in India, with a lot of localized every sphere...Automotive leading of course, but Schneider and their ilk, pharma companies...

It is the developed world that is being made to contract.

Changing times, indeed...



walküre's picture

Layoffs across the developing world in the high tech sector. Currencies crumbling. What are they manufacturing "localized" as you say? Germany has some of the best and cheapest labor in the world now and draws desperate job seekers from across Europe.

Boom for the shareholders and corporations, for the people not so much. The India story is over. China may keep chugging along but even their maniuplated and artificial growth is coming to an end. "Old" Europe and the West is still where its at as long as the Fed is in charge. Same as it ever was.

CitizenPete's picture

Aren't a lot of those cars built in the USSA now?

Wile-E-Coyote's picture

Yeah the papers are full of it over here. It is a fucking propaganda fest. The Sheeple are buying it, fecking morons.

stocktivity's picture

Deflation!  Here it comes.

Max Damage's picture

Yes but it beat, so BUY, BUY, BUY. Who cares that growth is shit and debt is at records and rising. Janet says buy so ye shall buy

knukles's picture

Debt is not only at record levels, but the percentage of bad loans is at record levels.
Woo ho!

GetZeeGold's picture



Got my no consequences insurance policy paid up.....let's do this thing.

Max Damage's picture

With AIG? They payout all the time, Just ask the Vampire Squid

theliberalliberal's picture

isnt exporting fiat counted in the GDP?  guess not or USA would be 109%  not 9%


hopefully wake up to a banking holiday tomorrow


night guys.  pitty cant be awake to see the Ag/Au fireworks thats seems to be starting



CitizenPete's picture

It has to be all those lazy ass Turks who immigrated for the social services, and the weather of course.

Pseudo Anonym's picture

or our young germans' duty to pay pensions to those living in israel

i kinda wonder how old was this slave labor in 1945 and how much and for how long they laboured at that time.  this is 2014.  the war ended in 1945, about 70 years ago. not bad if the average pension is over $20500  for work of a 10-year old done 70 years ago.  what kinda important work did they perform back then?  that's what i want to know.

Smegley Wanxalot's picture

Arbeit Macht Frei money for life!

yogibear's picture

The ongoing printing war  among countries isn't working for main street. Just goes into creating larger asset bubbles. 

Atomizer's picture

Bail me out bitchez, I'm coming down with cash burn flu symptoms.

StychoKiller's picture

No worries, the Fed will supply you with some paper bandaids...

Smegley Wanxalot's picture

"The U.S. administration reprimanded Germany in October in its semi-annual report to Congress for its  {high trade surpluses}."

Who the fuck is the USA to reprimand anyone for making shit that people want to buy?  Oh yeah, the USA is the same tyrannical fuckhole that reprimands its own people (via the IRS assholes) for daring to believe in liberty.


Dull Care's picture

The US Gubmint is the most hypocritical regime that's ever existed.

Wannabee's picture

Yawn...Glass half full or half empty. Bloomberg headlines German GDP exceeds estimates. I'm torn.

Smegley Wanxalot's picture

Bloomturd or Tyler ... whom to believe, whom to believe.

Wannabee's picture

Up arrow for correct use age of 'whom'. Didn't attend public schools did you...

Rising Sun's picture

If the Germans made more Audi's and parked them in a bigger field than the one that tens of thousands are already parked in, then the German GDP would go up and we would all be prosperous.


Fucking socialists!!!

youngman's picture

.01 or.03..that has always been good growth for the Eurozone....they would blow up if they had a 5% growth rate...they could not handle it..might have to cancel the August to .02%...that is OK with them...

TPTB_r_TBTF's picture

yeah, for 5%, they would have to actually exert themselves!

Iam Yue2's picture

Could not be the weak yen, so must be global warming related.

NEOSERF's picture

I believe the elderly in Germany probably could be hired on par with Chinese or Indian workers...waallah...just fixed the export problem...$24K Beamers...

Kirk2NCC1701's picture

This report is fine for pure information or status update, but woefully INCOMPLETE for drawing conclusions...

What's missing is the context of the Global Economy & Trade.  E.g. Given the beating that the EMs are experiencing at the hand of the Fed's King Fiat, aka King Dollar, this has an inevitable impact on trade among many nations. 

And no matter how good in quality the German wares are, at some point Price Sensitivity and Liquidity affects both Consumer and Commercial/Industrial (B2B) sales.  I'm amazed that Germany's exports are off by only 1% relative to the Avg.

If it's true that "As Germany goes, so goes the EU", then I can see that it is not in the interest of the USSA to have Germany get too cozy with Russia and China... because a closer link between the EU and those two behemoths, is really bad news for King Dollar.  And, lest we forget, the Brits have always been at odds with countries like France, Germany and Spain -- going back centuries to the monarch/feudal days. 

If the Continent cozies up to the Ruskies, Chinese and EMs too much, then it will be Frankfurt -- not London -- as the EU banking center.  The impact of such a shift would be HUGE to the Anglo-American alliance and its globalist/NWO plans.  This is the REAL elephant in the room that (almost) everyone overlooks, even the ZH owners.

Bananamerican's picture

Hmmm... like trading your (ungracefully) aging wife for TWO hot messes

walküre's picture

Record sales of Porsches didn't do squat, I gues.

The lessons here are many but most striking is that the economies cannot recover unless more rather than less people can participate in it. What is the point to be building the best cars or appliances when not enough people can afford the products? All manufacturers today are making the best there ever was, not just German automakers. The problem is that the high end is doing well but the low to mid range is teetering off. 

How much labor does it take to serve the high end sector? Not enough. The growing wage disparity among Americans and Europeans is becoming a bigger and bigger issue. When more and more ordinary folk cannot consume, replace, upgrade, spend or whatever then the economies CAN AND WILL NEVER RECOVER.

Get it in your heads central bankers, crony capitalists and economists. If you truly want what's best for the broader economy than you need to cut debt, raise wages and lobby governments to incentify replacements and upgrades.

Why not take this stupid carbon credit bullshit to the next level and allow a family to get a new low carbon emitting vehicle for FREE paid for by the carbon credits your buddies at JPM have raked up all those years?

Here's another idea, you assholes. Pay a family to take a vacation as long as they're taking a train and staying in a carbon neutral hotel. The money gets wasted anyway, why not do something useful for a change?

Ah, but that can't be, can it. Because the whole thing is a scam and it was never designed to actually reduce anything and government was never really created to do what's good for all the people in the country as opposed to serving only a very select few. I get it.

Keep drowning in your ponzi and your paper and watch fewer and fewer people making an effort to participate in the economy you're trying so desperately to control and manage. There are two sets of economies in every market. Guess where the people will turn to and survive as best as they can and potentially thrive. Once a critical mass is reached, the official system has no longer any significance. The elite will take notice when their servants are leaving one by one to enjoy living in the alternative. Money isn't everything.

Slaving away for a few hundred bucks a month, even a few thousand and giving up the best years, the best time of a man's life. It ain't worth it unless there is real upside, real incentive. Life is too short and sweet. Time to get off the reservation is now.

Tooter McGooter's picture

If ze Germans could just get over zer Guilt and recoup zer Gold zey could just take ze Euro off zer backs and return to ze DeutschMark.

earleflorida's picture

'Posthumous, East - West Germany warming to compassionate Putin?'

now... both made nearly whole(?)-- what's not to like or better yet, than an acquiesced reconciliation? as i've said before... germany and russia have a lot of good-karma 'uncommonness amongst them(?)'-- but, is that a good thing in the USSA new-world-order? i won't elaborate other than say the US nor Russia would have nothing economically or militarily had it not been for German genius divvied-up after WWII!

today, history fully tells all who have any semblance of rational thought (cognitive dissonance? attached to a cranium either/or hemisphere), or some type of intelligence... and, in simplistic most unbiased language, how Germany was hoodwinked into WWII via the US and French (eviscerating the German economy, what was thought to be forever?!?) at the Hall-of-(Future Horrors?) Mirrors in a multilateral(?) and lopsided Treaty of Versailles! enough talk!!!

from Pepe Escobar's roving eye to yours:      "The new US-Russia Cold War"     ( 2/14/14)

                                                                     ...and to save some time from Pepe's goto backup::  Stephen F. Cohen (Mar.3,2014 edition/ NATION)  "Distorting Russia"

Quote (MoarFunnyRealy):  `"Russian Intellectuals say when faced with two bad alternatives, "Both are worst."`

?FX sees troubled water in Eurasia to South America?!?


thankyou Tyler

bvrulez's picture

reading ZH comments...

you guys think "deflation is coming" but you also think bernanke is an asshole for inflating the money supply.

you guys think solar power is shit.

you guys think socialism is your problem.

YOU are the problem, you morons. the government has to take you idiots into account when deciding.