German economy grew at record pace in Q3 but fears are mounting | Business and Economy

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Europe’s largest economy grew 8.5% in the June-September period, but rising COVID infections are clouding the outlook.

Germany’s gross domestic product (GDP) grew a record 8.5% in the third quarter as Europe’s largest economy partially recovered from an unprecedented drop caused by the first wave of the COVID-19 pandemic in the northern spring, the statistics office announced on Tuesday.

The stronger-than-expected rebound is mainly due to rising household spending and surging exports, the office said.

“This allowed the German economy to offset much of the massive drop in gross domestic product caused by the coronavirus pandemic in the second quarter of 2020,” he added.

The reading marked an upward revision from a previous rapid estimate of 8.2% growth and followed a drop of 9.8% in the second quarter.

The outlook is clouded by a second wave of coronavirus infections and a partial lockdown to slow the spread of the disease. Restaurants, bars, hotels and entertainment venues have been closed since November 2, but shops and schools remain open.

Chancellor Angela Merkel and regional state prime ministers plan to extend the lockdown-light on Wednesday until December 20, according to a draft prepared for their meeting.

A contraction in the services sector is expected to weigh heavily on GDP in the fourth quarter, while lockdowns in other countries are expected to hit export-oriented manufacturers as well.

DIW economist Claus Michelsen said a decline in economic output was therefore to be expected, with early estimates pointing to a decline in GDP of around 1% in the last quarter.

“Germany and many important trading partners are likely to fall back into recession,” Michelsen said.


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