Private consumption and trade fuelled a 1.5 percent expansion of the German economy in 2014. It was its best performance in three years but as David Pollard reports it wasn't all good news.
German GDP at 1.5 per cent in 2014. It's a rare positive figure in what's been a sea of negatives for the euro zone recently. This latest reading boosted by private consumption and trade to give Germany its best performance in three years. Does it disguise an underlying weakness? Demand - or the lack of it in the euro zone economy - is very much in focus ahead of the ECB's next policy decision. That's just a week away now - with markets crossing their fingers Mario Draghi will present a programme of QE. James Bevan is chief investment officer of CCLA. SOUNDBITE (English) JAMES BEVAN, CHIEF INVESTMENT OFFICER, CCLA, SAYING: ''I think Mr Draghi has a very difficult challenge because although he obviously heads the ECB, the powers of the ECB are strictly limited. I absolutely anticipate that he will head for quantitative easing and that he will want to try and keep the value of the euro low.'' The euro zone's largest economy started the year well - with quarter-on-quarter growth at 0.8 per cent in Q1. By Q2, Germany was contracting, and in Q3 lucky not to slip into recession. Estimates for Q4 - at a quarter of a percent - suggest it might have nudged upwards again. Despite the rather blurry picture, stock pickers should, says Bevan, take a look. SOUNDBITE (English) JAMES BEVAN, CHIEF INVESTMENT OFFICER, CCLA, SAYING: ''The data from Germany are very confusing. I think at a company level there are some great performances. I look at SAP, a big dollar-earner doing extremely well. I also think that Siemens is doing well.'' The latest negative numbers come from Spain. Data there shows consumer prices one per cent lower in December. Their sixth monthly fall in a row - and the biggest rate of decline in over five years. Recent figures from across the euro zone are stirring worries over a new deflationary era. Private consumption may help Spain avoid that. SOUNDBITE (English) JAMES BEVAN, CHIEF INVESTMENT OFFICER, CCLA, SAYING: ''There are two aspects to the deflation story right now. The first obviously is oil and commodities. And they are creating pricing conditions that actually will be very good news for the economy because it will allow consumers to spend more money. The other sort of deflation, the bad deflation, I have to say I see remarkably little evidence in euro land right now, so I'm much more optimistic.'' Latest trade figures point sharply to one main cause for the euro zone's weak demand: Russia. Overall, euro zone exports were up by one percent in November. But, to Russia in the nine months leading up that, exports were down - 14 per cent.