German GDP down 1.7 percent in the first quarter
Economic output in Germany shrank in the first three months of the year as a result of the Corona crisis. The renewed restrictions are primarily a burden on the service providers.
Dhe corona pandemic slowed the German economy at the beginning of the year. After two quarters of partly strong growth, economic output contracted again in the first quarter of 2021 – by 1.7 percent compared to the previous quarter. This was announced by the Federal Statistical Office on Friday in an initial estimate.
In the final quarter of 2020, according to the latest calculations, the price-adjusted gross domestic product (GDP) increased by 0.5 percent, and in the third quarter by as much as 8.7 percent. This was preceded by a historic economic crash as a result of the Corona crisis.
The renewed restrictions in the course of fighting the coronavirus have been affecting many industries, especially service providers, since the beginning of the new year. For example, restaurateurs and hoteliers are struggling with lost sales. Industry associations warn of a wave of bankruptcies.
Private consumption slowed
The lockdown also slowed private consumption, which is normally a reliable pillar of the domestic economy. There have been no full pedestrian zones and shopping centers for months.
The expiry of the VAT cut at the turn of the year also had a dampening effect at the beginning of 2021: Consumers had brought purchases forward to the second half of 2020 due to the lower tax rates. These purchases are now missing from the consumption statistics for the first three months of the current year.
The order books in industry are still well filled; exports rose for the tenth month in a row in February and are approaching the pre-crisis level. In important foreign markets such as China and the United States, the demand for goods “Made in Germany” has recently increased.
Economists assume that Europe’s largest economy will return to growth trajectory from the second quarter onwards. If more and more people are vaccinated against the coronavirus and the restrictions on public life are scaled back, private consumption in Germany should also increase again.
In its recently raised forecast, the federal government expects the German economy to grow by 3.5 percent for the year as a whole. Last year economic output slumped by 4.9 percent. “This year is the year in which we finally manage the turnaround,” said Federal Minister of Economics Peter Altmaier on Tuesday. “We will not only stop the economic slump, we will reverse it. We will have regained our old strength by 2022 at the latest. “
In the eurozone as a whole, the economy contracted less than feared in winter. In the first quarter, economic output fell by 0.6 percent in a quarterly comparison, the Eurostat statistics office announced on Friday, according to an initial estimate. Economists had expected a decline of 0.8 percent. In the final quarter of 2020, the economy had sunk by 0.7 percent.