German economy below pre-pandemic level despite growing 2.7% in 2021

0

BERLIN — Germany’s economy failed to regain its pre-pandemic size in 2021 as microchip shortages hit production in the auto industry and new COVID-19-related restrictions slowed the recovery of the largest economy in Europe during the last months of the year.

Gross domestic product rose 2.7% in 2021 after plunging 4.6% in the first year of the 2020 coronavirus crisis, preliminary figures from the Federal Statistics Office revealed on Friday.

The figures, which were in line with analysts’ forecasts in a Reuters poll, meant Germany’s economic output was still around 2% below pre-crisis 2019 levels, the office said.

The world’s fourth-largest economy shrank in the final three months of 2021 after rising in the previous two quarters as a resurgence in coronavirus infections prompted new restrictions in retail and hospitality, the bureau said.

An early estimate pointed to a contraction in the fourth quarter of between 0.5% and 1.0% quarter-on-quarter, a spokesperson added.

The main drivers of growth in 2021 were an increase in exports and massive government spending to cushion the impact of the pandemic, the bureau said.

However, the development and domestic production of a breakthrough COVID-19 vaccine by German startup BioNTech has also boosted growth significantly, a spokesperson for the statistics office said, without quantifying the impact.

Economic institutes have estimated that BioNTech alone added 0.5% to German economic output last year, which would account for almost a fifth of the overall expansion.

“I can’t think of another German company that has ever contributed so much to overall economic growth,” said Sebastian Dullien of the macroeconomic policy institute IMK.

Germany increased its net new borrowing to a record 215 billion euros ($245.87 billion) last year after an unprecedented 130 billion euros in 2020 to finance the fight against COVID .

The public sector deficit at all levels of government amounted to €153.9 billion, or 4.3% of economic output.

The Ministry of Economy said in its monthly report that bottlenecks in the supply of important primary products in the manufacturing sector are expected to persist for some time.

Most economists expect the German economy to contract again in the first three months of 2022, plunging it into another technical recession, defined as two consecutive quarters of contraction, after the economy contracted. in the first two quarters of 2020.

($1 = 0.8744 euros)

(Reporting by Michael Nienaber and Miranda Murray Additional reporting by Riham Alkousaa and Rene Wagner Editing by Zuzanna Szymanska, Frank Jack Daniel and Tomasz Janowski) (([email protected]; +49 30 2888 5085; Reuters Messaging: michael.nienaber [email protected] www.twitter.com/REUTERS_DE www.Reuters.de))

Share.

About Author

Comments are closed.