German economy grew 0.3% in Q4, better than expected

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BERLIN (AP) – The German economy grew 0.3% in the fourth quarter of last year compared to the previous three months, official data showed on Wednesday – a better performance than previously thought.

The Federal Statistical Office announced at the end of January that the gross domestic product had slightly increased by 0.1% during the period October-December.

Wednesday’s revision meant that last year’s overall drop in GDP was somewhat smaller than originally announced – 4.9% instead of 5%. This drop ended a decade of growth and was the biggest drop since the financial crisis of 2009.

The German economy has done better than several others in the 19 eurozone countries because it was supported by the manufacturing sector, which was less affected than services during the pandemic.

Yet the coronavirus pandemic has hit Germany’s finances. After years in the dark, the government has resorted to new debt to help cover the cost of huge worker support programs and a projected shortfall in tax revenue.

The statistics office said Germany had a budget deficit last year of 4.2% of GDP – above the 3% normally allowed by euro area rules.

On Monday, elementary school students in more than half of Germany’s 16 states returned to school after more than two months at home, the first major easing of the country’s pandemic measures since they were tightened shortly before Christmas.

Hairdressers are expected to reopen across the country on March 1, but it’s unclear when new measures to ease restrictions will be allowed. Industry was not directly affected by the measures.

Germany has seen its infection rate drop dramatically over the past two months, but progress appears to have stalled in recent days amid concerns over the impact of more contagious viral variants. The country has recorded more than 68,000 confirmed deaths from the virus since the start of the pandemic.

“The construction sector, industrial activity and foreign demand helped prevent the German economy from contracting during the second lockdown,” ING economist Carsten Brzeski said in a research note.

But he pointed to the risks for the current quarter of a larger impact from the foreclosure, a very significant cold snap this month and weaker foreign demand, including a possible reversal of “any hoarding. pre-Brexit “in Great Britain.

“Fourth-quarter growth engines could easily become a drag in the first,” he noted.


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