Press release No.016 / 2009-01-14

Only moderate growth of the German economy in 2008

Concise version

WIESBADEN – German economic growth in 2008 was considerably weaker than in the two preceding years. According to provisional calculations of the Federal Statistical Office (Destatis), the price-adjusted gross domestic product (GDP) rose by 1.3% on the previous year. In 2007, GDP still grew by 2.5%, and in 2006 by 3.0%.

Gross domestic product, price-adjusted, chain-linked
Change on the previous year:
1998	1999	2000	2001	2002	2003	2004	2005	2006	2007	2008
+ 2.0	+ 2.0	+ 3.2	+ 1.2	+ 0.0	– 0.2	+ 1.2	+ 0.8	+ 3.0	+ 2.5	+ 1.3

Economic growth in 2008 was solely based on domestic demand. Gross capital formation contributed most to GDP growth. Gross fixed capital formation in machinery and equipment rose by 5.3% (following + 6.9% in 2007), and gross fixed capital formation in construction rose by 2.7%. Final consumption expenditure by general government rose by 2.2% in 2008 upon price adjustment, while final consumption expenditure of households remained stagnant. Net exports, i.e. the difference between exports and imports of goods and services, slowed down economic growth in 2008 (contribution of - 0.3 percentage points to growth). The reason for that is the comparably small rise in exports by only 3.9% (2007: + 7.5%). At the same time, imports showed a price-adjusted increase of 5.2% and thus grew slightly stronger than in 2007 (+5.0%).

The economic performance was achieved by 40.4 million persons in employment on an annual average in 2008, which was 582,000 persons more (+ 1.5%) than a year earlier.

According to provisional calculations, general government net borrowing amounted to EUR 1.6 billion in 2008. When put in relation to GDP at current prices, this leads to a deficit ratio of 0.1%. Government net lending/net borrowing was strongly influenced by one-off effects without which general government would have registered a financial surplus in 2008.

On 13 February, the Federal Statistical Office will release first national accounting results for the fourth quarter of 2008, and the revised results for the year 2008 (GDP only); on 25 February, the detailed results will be published.

Only moderate growth of the German economy in 2008

Detailed version

WIESBADEN – German economic growth in 2008 was considerably weaker than in the two previous years. According to provisional calculations of the Federal Statistical Office (Destatis), the price-adjusted gross domestic product (GDP) rose by 1.3% on the previous year. In 2007, GDP still grew by 2.5%, and in 2006 even by 3.0%.

Gross domestic product, price-adjusted, chain-linked
Change on the previous year:
1998	1999	2000	2001	2002	2003	2004	2005	2006	2007	2008
+ 2.0	+ 2.0	+ 3.2	+ 1.2	+ 0.0	– 0.2	+ 1.2	+ 0.8	+ 3.0	+ 2.5	+ 1.3

When examining the calendar-adjusted figures − the number of working days available in 2008 was by 2.7 days higher than in 2007 − the GDP growth rate amounted to 1.0%.

Gross domestic product, price- and calendar-adjusted, chain-linked
Change on the previous year:
1998	1999	2000	2001	2002	2003	2004	2005	2006	2007	2008
+ 1.8	+ 1.9	+ 3.5	+ 1.4	+ 0.0	– 0.2	+ 0.7	+ 1.0	+ 3.2	+ 2.6	+ 1.0

The economic performance was achieved by 40.4 million persons in employment on an annual average in 2008, which was 582,000 persons more (+ 1.5%) than a year earlier. Hence, employment reached its highest level since German reunification. According to provisional results based on the labour force survey, the number of unemployed persons (international definition) decreased by 471,000 (− 13.1%) to 3.1 million. That is the lowest number of unemployed since 1993.

Labour productivity, measured as the price-adjusted gross domestic product per person in employment, decreased by 0.2% in 2008, and by 0.1% per hour worked. In earlier years since 1992, both the overall labour productivity per person in employment and per hour worked had continuously been growing.

As regards the production side of the gross domestic product, all economic sectors had a positive impact on economic growth in 2008. Industry (including energy) and financial, real-estate, renting and business activities, however, recorded much lower growth rates than in 2007. Upon price adjustment, gross value added generated by industry rose by 0.7% (following + 5.2% in 2007), that of financial, real-estate, renting and business activities grew by 1.7% (2007: + 3.6%). Construction again experienced a positive development and increased its economic performance by 3.3%. Trade, transport and communications (+ 1.9%) achieved a much higher economic performance than a year earlier, as did agriculture, hunting and forestry and fishing (+ 4.0%), too. Gross value added generated by other service activities rose by 0.9% on 2007.

As regards the use side of gross domestic product, impulses for economic growth solely came from domestic demand in 2008. Gross capital formation, which is composed of gross fixed capital formation – i.e. mainly gross fixed capital formation in machinery and equipment and gross fixed capital formation in construction – and changes in inventories, rose by 6.1%. Enterprises again stepped up their gross fixed capital formation activities in machinery, equipment and vehicles (+ 5.3%) in 2008, while the gross fixed capital formation dynamism however weakened; in 2007, gross fixed capital formation in machinery and equipment still rose by 6.9% on a year earlier, and in 2006 even by 11.1%. Gross fixed capital formation in construction grew by 2.7% in 2008. While gross fixed capital formation in residential construction grew only moderately (+ 0.7%), gross fixed capital formation in other buildings and structures rose by 5.6% – which is the highest rate of growth since 1992. Here, in particular gross fixed capital formation in building construction recorded a very high growth rate of + 7.8%. Changes in inventories contributed 0.3 percentage points to economic growth. Low raw material prices and, in some sectors, a difficult situation of sales led to a massive build-up of inventories by many enterprises in the second half of year.

Final consumption expenditure grew by 0.5% in 2008. This was exclusively due to a 2.2% rise in the final consumption expenditure of general government. The final consumption expenditure of households remained unchanged as compared to the previous year.

Net exports, that is, the balance of exports and imports of goods and services, which had been an important motor of growth for the German economy throughout the previous years, made a negative contribution to economic growth of 0.3 percentage points in 2008, thereby slowing down the economic development. The main reason for this was a significantly lower increase in external demand as compared to earlier years, while the German economy showed a continuing propensity to import. German exports grew by 3.9% in 2008, after rising by as much as 7.5% in 2007 and even by 12.7% in 2006. At the same time, imports showed a price-adjusted increase of 5.2% and thus grew slightly stronger than in 2007 (+5.0%).

The net national income (factor costs), the two components of which are compensation of employees and property and entrepreneurial income, rose by 2.9% to EUR 1,880 billion in 2008. Compensation of employees accounted for EUR 1,226 billion, which was an increase of 3.6% on a year earlier. Property and entrepreneurial income increased by 1.7% in 2008, reaching EUR 655 billion. Compared with 2007, the share of compensation of employees in the net national income (factor costs) grew by 0.4 percentage points to currently 65.2%.

Gross wages and salaries increased by 3.9% in 2008 and totalled about EUR 996 billion. The strong rise – which is the highest since 1992 – reflects both the pay increases in 2008 and the renewed rise in employment. Net wages and salaries, which are obtained after deduction of wage tax and employees' social contributions, amounted to well over EUR 642 billion and hence were 3.0% above the level of the previous year. Both employee wage tax (+5.9%) and employees' social contributions (+5.2%) saw substantial increases. The higher social insurance contributions were due, among other things, to a rise of the minimum contribution level for private old-age provision and an increase in the contribution rate for long-term care insurance.

The number of employees was up by 1.6% in 2008. Gross wages and salaries per employee climbed by 2.3%, while average net wages and salaries rose by 1.4%.

In 2008, the disposable income of households increased by 2.6% to EUR 1,553 billion. This is the highest rate of growth since 2001. As in 2007, the development of the final consumption expenditure of households at current prices (+2.2%) did not keep pace in 2008 with the growth in disposable income. Accordingly, the saving ratio of households increased by 0.6 percentage points to 11.4%. Such a high rate was last seen in 1994.

According to provisional calculations, general government, consisting of the central government, state government, local government and social security funds, recorded net borrowing of EUR 1.6 billion in 2008. When put in relation to the gross domestic product at current prices, this equates to a 0.1% deficit ratio of general government. The target of achieving a balanced net lending/net borrowing position was missed mainly because one-off effects had a significant impact on net lending/net borrowing of general government in both 2007 and 2008. These effects arose, on the one hand, from European Union accounting rules on certain support measures related to the financial crisis and, on the other, from the judgment delivered by the Federal Constitutional Court in December 2008 on the commuter tax allowance. Without these one-off effects, general government would have recorded a surplus in 2008.

On 13 February 2009, the Federal Statistical Office will publish first national accounting results for the fourth quarter of 2008 and the revised results for the year 2008 (only GDP); on 25 February 2009, the detailed results will be released.

The results published in August 2008 for the years 1991 to 2007 have not been revised, as is always the case at this time of the year.

National accounts data may be accessed via the internet. In addition, more detailed results are published in Fachserie 18 “Volkswirtschaftliche Gesamtrechnungen”, Reihe 1.1 “Erste Jahresergebnisse” . The above and other publications can be downloaded free of charge from the Publication Service of the Federal Statistical Office. A comprehensive quality report on national accounts is also available for free via the internet.

>>> brief methodological description

For further information please contact:
National accounts info team,
tel: (+49-611) 75-2626,

E-mail: gdp-info@destatis.de

Gross domestic product, gross national income and net national income (factor costs)
	2005	2006	2007	2008
Change on the previous year in %
Use of the gross domestic product
At current prices
Final consumption expenditure of households and NPISHs	1.7	2.3	1.4	2.2
Government final consumption expenditure	1.0	1.3	2.4	4.0
Gross fixed capital formation	1.0	8.2	7.2	5.2
Machinery and equipment	4.9	9.8	6.3	4.4
Construction	–2.1	7.5	8.1	6.2
Other products	2.5	3.9	5.1	2.6
D o m e s t i c u s e s	1.2	3.1	2.8	3.5
Exports	8.4	14.3	8.0	4.7
Imports	8.8	14.9	4.9	6.9
G r o s s d o m e s t i c p r o d u c t (GDP)	1.5	3.5	4.4	2.7
Price-adjusted, chain-linked
Final consumption expenditure of households and NPISHs	0.2	1.0	–0.4	0.0
Government final consumption expenditure	0.4	0.6	2.2	2.2
Gross fixed capital formation	1.1	7.7	4.3	4.1
Machinery and equipment	6.0	11.1	6.9	5.3
Construction	–3.0	5.0	1.8	2.7
Other products	4.9	8.0	8.0	6.6
D o m e s t i c u s e s	0.0	2.1	1.1	1.6
Exports	7.7	12.7	7.5	3.9
Imports	6.5	11.9	5.0	5.2
G r o s s d o m e s t i c p r o d u c t (GDP)	0.8	3.0	2.5	1.3
memorandum item:
GDP per hour worked by person in employment	1.4	2.5	0.6	–0.1
Gross national income	1.7	4.0	4.3	2.7
Net national income (factor costs)	1.5	4.1	3.5	2.9
Compensation of employees	–0.6	1.7	3.0	3.6
Property and entrepreneurial income	5.9	8.7	4.5	1.7
Disposable income of households	2.0	1.9	1.6	2.6
Contributions to growth of the price-adjusted GDP in percentage points
Domestic uses	0.0	2.0	1.1	1.5
Final consumption expenditure of households and NPISHs	0.1	0.6	–0.2	0.0
Government final consumption expenditure	0.1	0.1	0.4	0.4
Gross fixed capital formation (GFCF)	0.2	1.3	0.8	0.8
including: GFCF in machinery and equipment	0.4	0.8	0.5	0.4
GFCF in construction	–0.3	0.5	0.2	0.3
Changes in inventories, etc.	–0.4	0.0	0.1	0.3
Balance of exports and imports (net exports)	0.7	1.0	1.4	–0.3

For more details please refer to the German version.

Contact:
tel: (+49-611)75-3444
fax: (+49-611)75-3976
presse@destatis.de
www.destatis.de

Service hours:
Mon - Tue: 8am - 5pm
Fri: 8am - 3pm
CET / CEST

Postal address:
65180 Wiesbaden
Germany

Inhalt maximieren (Accesskey 3)