German economy avoids sliding into recession
This comes depite the largest economy in the 17-country eurozone falling sharply, by 0.6%, in the final months of 2012. Had the country experienced two straight-quarter dips, Germany could have found itself officially in recession.
Businesses are most likely to start expanding and investing again as fears about government debt crisis ease, the Bundesbank stated, adding that “a plus in total economic production can be expected for the first quarter of 2013.”
The purchasing power of German consumers and industry is seen as key to the recovery of the Euro bloc, largely due to Germany's high import trade from European neighbors in the bloc. In addition, German companies use firms in neighboring countries as suppliers.
Many European Union euro states are mired in recession. The European Central Bank predicts the eurozone will shrink 0.3% in 2013 and can only start recovering later in the year. Governments are cutting spending and raising taxes to reduce heavy levels of debt, slowing their economies. Greece, Portugal and Ireland have needed bailout loans from the other eurozone members, while Spain and Italy are struggling in recessions with high unemployment.