The German economy shrank as much as 1% in the last three months of last year, as the latest coronavirus restrictions and supply chain bottlenecks kept output below pre-pandemic levels.
The Federal Statistics Office on Friday released initial estimates showing that Europe’s largest economy controlled 2.7% growth last year, although fourth-quarter output fell from zero. 5 to 1% from the previous quarter.
The numbers mark a recovery since 2020, when Germany’s gross domestic product fell 4.6% in a record post-war recession caused by the Covid-19 crisis. However, the country is lagging behind other major economies, including the US, France and the UK, which have recovered above pre-pandemic output levels.
Georg Thiel, president of Destatis, Germany’s statistics agency, said the country’s GDP is still 2% below pre-pandemic levels. “Despite the ongoing pandemic situation and growing supply and raw material bottlenecks, the German economy has been able to recover from the previous year’s plunge, although economic output has yet to fall. reached pre-crisis levels”.
Growth would have been lower without the additional contribution from the licensing fees collected by German vaccine developer BioNTech, which boosted overall GDP by 0.5 percentage points last year, according to Destatis. .
Germany’s vast manufacturing sector has stalled for months due to supply chain delays and shortages of raw materials such as semiconductors. Its larger services sector is also being hampered by new restrictions aimed at stemming a record spike in coronavirus infections.
“The final quarter of 2021 was probably weak due to the necessary restrictions on services with intense exposure and production difficulties in the manufacturing sector due to congestion,” the German Finance Ministry said in a statement. continuous supply,” the German Finance Ministry said in a statement.
Economists expect the German economy to rebound strongly later this year as coronavirus restrictions are lifted and supply bottlenecks ease. But they worry that if problems persist, the country could slip into a recession – defined as two consecutive quarters of falling GDP.
Carsten Brzeski, head of macro research at ING, said: “The annualized numbers represent a contraction in the economy in the final quarter of 2021, highlighting the high risk of the economy falling into recession. full recession at the beginning of the year”.
The Bundesbank last month cut Germany’s growth forecast but said it still expects the economy to recover above pre-pandemic GDP levels in the coming months with 4.2% growth in 2022, boosted by “private consumption boom”, as well as higher exports and business investment.
“From early summer onwards, we expect the economy to bounce back strongly with the seasonal weakening of the halo,” said Jörg Krämer, chief economist at Commerzbank. “This is also supported by the fact that the production facility’s order book is more than at any time since the statistics began in the early 1960s.”
Destatis said output in the country’s manufacturing sector last year was still 6% below 2019 levels, while the shortfall in the sports, cultural and entertainment sectors was 9.9%.
This is partially offset by a public sector recovery, which has been fueled by increased government spending, as the country’s budget deficit rose slightly to 153.9 billion euros last year, a high. second since the country was reunified more than 30 years ago.