Germany experienced the strongest growth in four years in 2004, but weak consumer spending continued to hamper Europe's largest economy, the government statistics office said Thursday.
Gross domestic product grew 1.7 percent last year compared to a 0.1 percent decline the year before, matching economists' forecasts, the Wiesbaden-based Federal Statistics Office said.
It was the best year since 2.9 percent growth in 2000 and more growth than in the previous three years combined.
Still, it lagged global growth last year estimated by the International Monetary Fund at around 4.93 percent.
German Economics and Labor Minister Wolfgang Clement said the upturn was only the beginning.
"Apart from a growing number of signals for a stronger economic growth recovery in the year 2005, we have today with the 2004 GDP seen further reason for confidence," he said. "The turning point for the trend was 2004. The economic recovery will gain strength and broaden in 2005."
Clement's optimism is not shared, however, by the country's six major economic research institutes, which predict growth of between 0.8 percent and 1.3 percent in 2005.
Exports were the engine driving the growth, up 8.2 percent for the year, the Federal Statistics Office said.
But many have expressed concern that the rapid rise in the strength of the euro, which shot up from $1.20 in September to an all-time high of $1.3667 at the end of December, could put a damper on European exports in 2005.
The euro was trading just above $1.32 on Thursday.
And the Federal Statistics Office reported that private consumption weakened in 2004, falling 0.3 percent after remaining flat in 2003.
Still, Clement said he expected domestic demand to recover.
"More confidence combined with further tax cuts at the beginning of this year and the expectation of a gradual improvement on the labor market will get the domestic economy out of the trough in 2005," he said.
By: N. Peter Kramer
