14 Jan 2021
Germany’s economy contracted by 5.0% last year, less than predicted and smaller than during the global financial crisis.
The government’s stimulus measures and rescue packages helped to soften the blow of the coronavirus crisis.
In addition, Reuters reports, France and Italy’s economies – the second and third largest in the eurozone – are set to contract by 9% in 2020, underscoring the mounting incongruities within the 19-country currency bloc.
A Reuters poll predicted Germany’s economy to shrink by 5.1%, under the 5.7% registered in 2009 during the financial crisis.
The statistics office stated that GDP declined by 5.3%.
According to LBBW analyst Uwe Burkert: “It was actually a year of disaster, but judging by what had been feared in the course of the year, one could say we got off lightly.”
Growth likely stagnated in Q4, but held positive momentum moving into the new year, said the statistics office, indicating Germany has coped comparatively well with the second wave of coronavirus infections.
Furthermore, Germany’s Finance Minister Olaf Scholz is predicted to accumulate over €300bn in new debt in 2020 and 2021.
The public sector, including federal states, municipalities and social security systems, had a budget deficit of €158.2bn, or 4.8% of GDP, the statistics office said.
This points to a sharp decline of public finances following a surplus of €52.5bn or 1.5% in 2019.
In addition, exports plummeted nearly 10%, whilst imports fell 8.6%, signalling Germany’s trade surplus reduced during the Covid pandemic.
In contrast, government spending drove up state consumption by 3.4%, and there was a 1.5% hike in building investment, according to the preliminary data published on Thursday.