Economists say consumption to boost 2012 growth

Germany's economy contracted by 0.2 percent in the fourth quarter on sagging exports and private consumption, data showed on Friday, but analysts said they expected Europe's growth engine to pick up steam again this year, according to Reuters. Investments, particularly in construction, were a bright spot. The seasonally adjusted data from the Statistics Office confirmed an earlier flash estimate and showed trade and private consumption, respectively, subtracting 0.3 and 0.1 percentage points from Gross Domestic Product. Exports in particular dropped 0.8 percent in the fourth quarter after growing 2.6 percent in the previous three months. Economists put this down to weaker demand from the euro zone, which is mired in a sovereign debt crisis. Germany's traditionally export-led economy had grown 0.6 percent in the third quarter, contributing to 3 percent full year growth. Economists now expect the economy to stagnate in the first quarter of 2012, dodging the two quarters of negative growth which define a recession, before recovering from the second quarter on the back of private consumption. Forward-looking indicators are upbeat. Business sentiment rose to its strongest in seven months in February, a key survey showed on Thursday. Third quarter data was revised upwards to show consumption growing 1.2 percent versus an originally reported 0.8 percent. The data on Friday showed investments supported the economy in the fourth quarter, particularly investments in construction which rose 1.9 percent, adding 0.2 percentage points to GDP.