Economic growth was unrevised at the end of last year. A 0.3 percent quarterly decline in GDP matched the provisional estimate and left annual workday adjusted growth similarly unchanged at minus 0.2 percent. With total output estimated to have flatlined in the previous quarter, Germany avoided a technical recession in 2023, but by the barest of margins. Unadjusted, GDP was down 0.4 percent on the year.

Household consumption rose 0.2 percent on the quarter, having been only flat in the third quarter, and government spending was up 0.3 percent following a 1.1 percent gain. However, gross fixed capital formation fell a further 1.9 percent, compounding its 2.3 percent slump in July-September. Within this, construction was down 1.7 percent and investment in machinery and equipment fully 3.5 percent. Business inventories also subtracted 0.1 percentage point.

Meantime, net foreign trade had a neutral impact as a 1.6 percent drop in exports was cancelled out by a 1.7 percent decline in imports. Net exports added 0.4 percentage points to growth in the third quarter.

The unrevised fourth quarter update confirms a miserable end to the year by the German economy and easily the worst performance by any of the larger four Eurozone member states. Moreover, to date, consumer and business surveys have pointed to another fall in total output this quarter which would signal the arrival of recession. As it is, the German RPI (minus 14) and RPI-P (minus 16) make for downside risk. Even so, inflation remains well above the ECB's target and today's report will do nothing to advance the timing of the first cut in the central bank's key interest rates.

No revisions are expected to the provisional data, leaving a 0.3 percent quarterly contraction and a 0.2 percent workday adjusted yearly decline.

Gross domestic product (GDP) is the broadest measure of aggregate economic activity and encompasses every sector of the economy. Following the release of the flash estimate about two weeks earlier, the second report incorporates additional data to provide a more accurate reading. It also contains details of the key GDP expenditure components and full national accounts.

GDP is the all-inclusive measure of economic activity. Investors need to closely track the economy because it usually dictates how investments will perform. Stock market Investors like to see healthy economic growth because robust business activity translates to higher corporate profits. The GDP report contains information which not only paints an image of the overall economy, but tells investors about important trends within the big picture. These data, which follow the international classification system (SNA93), are readily comparable to other industrialized countries. GDP components such as consumer spending, business and residential investment illuminate the economy's undercurrents, which can translate to investment opportunities and guidance in managing a portfolio.

Each financial market reacts differently to GDP data because of their focus. For example, equity market participants cheer healthy economic growth because it improves the corporate profit outlook while weak growth generally means anemic earnings. Equities generally drop on disappointing growth and climb on good growth prospects.

Bond or fixed income markets are contrarians. They prefer weak growth so that there is less of a chance of higher central bank interest rates and inflation. When GDP growth is poor or negative it indicates anemic or negative economic activity. Bond prices will rise and interest rates will fall. When growth is positive and good, interest rates will be higher and bond prices lower. Currency traders prefer healthy growth and higher interest rates. Both lead to increased demand for a local currency. However, inflationary pressures put pressure on a currency regardless of growth.