Germany Narrowly Avoids Economic Contraction in 4Q 2020

29 January 2021

By David Barwick – FRANKFURT (Econostream) – The German economy narrowly avoided contraction in the fourth quarter of last year, according to price, seasonally and calendar-adjusted data released Friday by the Federal Statistical Office.

Though better than many observers’ expectations, the weak expansion of 0.1% represented a renewed setback after the 8.5% quarterly rebound the previous quarter and reflected the impact of the pandemic’s resurgence and the associated public health policy measures.

Compared to the same quarter of the previous year, just before the outbreak of the pandemic, last quarter was down a real 2.9% or, adjusting for calendar effects, a real 3.9%, the Statistical Office said.

For 2020 as a whole, output declined 5.0% or a calendar-adjusted 5.3%, underscoring the severity of the pandemic’s economic fallout.

With the release on 24 February of more detailed information about German growth could also come downward revisions, given that containment measures intensified in the middle of last month.

Moreover, the current quarter is highly unlikely to bring relief, as stricter lockdown is apt to apply for most if not all of the period.

However, with the easing of lockdown presumably starting thereafter and an increasing percentage of the population vaccinated after an awkward start, a return to rebound mode is anticipated.