German economy posts minimal growth

31 January, 2021 12:00 AM printer

BERLIN: The German economy, Europe's largest, posted just 0.1 percent growth in the fourth quarter last year as new coronavirus restrictions choked off activity, official figures showed Friday.

The Destatis statistics office said a sharp rebound of 8.5 percent in the third quarter "was braked by the restrictions imposed (to curb) a second wave of the virus at the end of the year".

Compared with fourth quarter of 2019, the German economy contracted 3.9 percent, reports AFP.

For full-year 2020, the Germany economy shrank 5.0 percent, in line with estimates published earlier this month.

Meanwhile the Federal Labour Agency reported a stable unemployment rate for January of 6.0 percent despite the new measures imposed the previous month to slow the spread of coronavirus.

The country closed restaurants, hotels, culture and leisure centres in November, followed by schools and non-essential shops in December. The measures have since been extended until mid-February.

Analysts said the outlook remained uncertain.

"The resilience shown in the fourth quarter is not going to last," said Andrew Kenningham, chief economist at Capital Economics.

According to the DIW Institute, German output in the first quarter this year could shrink 3.0 percent.

But there is some hope that the rollout of vaccination programmes will begin to limit the pandemic damage later in the year.

"We could see a clear rebound in the second half of the year if enough people get vaccinated," said Fritzi Koehler-Geib, chief economist with KFW bank.

Earlier this week, the German government cut its 2021 growth forecast sharply, to 3.0 percent from 4.4 percent given the persistence of the health crisis which likely means the economy will not return to pre-pandemic levels until mid-2022.