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Germans Remain in Spending Mode

Germans Remain in Spending Mode   Germans Remain in Spending Mode

Domestic consumption in Germany has reached levels not seen in over two decades. Undeterred by terrorism fears or unease over the refugee influx, shoppers are driving Europe’s largest economy more than any other factor.

Germans are on a spending spree, and its doing wonders for their economy. Last year, retailers logged their strongest annual sales increase since 1994, Germany’s statistics office Destatis reported Friday. Sales rose 2.7% on the year, jumping 0.2% in December alone, DW reported.

That’s significant because retail sales are an important barometer of consumer confidence, which at the moment is the main source of growth for Germany’s economy.

The rise in sales is also telling of a broader trend of defiance, one that suggests Germans remain in a spending mood despite anxiety over potential terrorist attacks or the eventual fiscal ramifications of millions of refugees entering the country.

It was the second time this week that German statisticians confirmed the robustness of household spending, after the market research company GfK published its leading consumer confidence index on Wednesday.

But terror fears did drag on the economy of Germany’s neighbor, France. There, year-on-year private consumption shrank by 0.4% in the fourth quarter. In the three months prior, before gunmen mowed down 130 people in Paris, it rose 0.4%.

 Growth Likely Minimal

Weak industrial production in Germany probably slowed down economic output in the final quarter of 2015, according to the country’s finance ministry. A recent Chinese slump may have had a larger-than-expected effect.

The ministry warned on Friday that economic output was likely to only have increased slightly in the last quarter of 2015. It blamed weak industrial production, but said leading indicators suggest that the German economy would soon recover, according to the ministry’s latest monthly report. Additionally, rising orders suggested industrial output would pick up.

“The German economy is in good condition, despite the tough global environment,” the report said.

Businesses suffered due to geopolitical tensions, the experts said, specifically mentioning the economical crisis in Russia.

Also, the recent Chinese slump may have had larger effect than expected, the report states.

Earlier this month, the Statistic Office announced that the country’s GDP rose by 1.7% in 2015. A preliminary report on the last quarter is due on February 12.

In its economic forecast for 2016 on Wednesday, the German government projected moderate GDP growth, with weaker export demand from a slowdown in developing countries offset by stronger domestic demand thanks to rising wages.

Financialtribune.com