German economy likely contracted in fourth quarter: Bundesbank


Shoppers wear a mask and fill Cologne’s main shopping street Hohe Strasse (High Street) in Cologne, Germany, December 12, 2020. REUTERS/Wolfgang Rattay

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FRANKFURT, Jan 24 (Reuters) – Germany’s economy likely contracted in the fourth quarter as manufacturing remained constrained by supply bottlenecks and consumption tumbled on renewed coronavirus fears, the Bundesbank said in a monthly report on Monday.

Growth in Europe’s largest economy stalled in the fall as supply shortages and shipping bottlenecks dampened its large industrial sector, although consumption held up relatively well.

But household consumption was also hit late in the year by fears over the Omicron variant, which forced companies to reinstate business restrictions.

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“The behavioral adjustments and containment measures triggered in some cases had a significant impact on economic activity in the services sector, especially in December,” the Bundesbank said.

“Germany’s real gross domestic product is expected to have fallen slightly in the last quarter of 2021.”

Prospects for the new year look brighter, however, after strong industrial production growth, helped by easing supply bottlenecks, pushed manufacturing activity to a five-point high. month in January, according to separate data released on Monday. Read more

The inflation outlook, however, could take longer to improve, the Bundesbank said, warning that price growth could remain “unusually high” in early 2022 due to soaring energy costs. and delivery bottlenecks.

German inflation hit 5.7% in December and the Bundesbank sees it above the European Central Bank’s 2% target until at least 2024.

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Reporting by Balazs Koranyi, editing by Ed Osmond

Our standards: The Thomson Reuters Trust Principles.


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