German economy stalls, likely avoids double dip recession | Business and Economy News

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German officials predict that the renewed pandemic lockdown will not have the same harsh impact as the restrictions earlier in 2020.

Through Bloomberg

The German economy stagnated at the end of last year, likely avoiding a double-dip recession that engulfed the eurozone.

The bureau of statistics predicted that the country’s new pandemic lockdown would not have the same severe impact as restrictions earlier in 2020. It estimates that production remained stable in the fourth quarter, capping a year that saw an economic contraction by 5%.

The government recorded a budget deficit of 4.8 percent of gross domestic product, the largest since 1995.

Germany is the first advanced economy to release GDP figures for 2020, and it is likely to have fared better than its main European peers. Economists predict that France and Italy both saw declines of around 9% and the UK’s gross domestic product may have fallen by more than 10%.

The pain stretches through 2021 after a new wave of infections forced governments to extend lockdowns. Yet Germany has so far been relatively resilient, in part thanks to strong government support and its large manufacturing sector.

“It will be decisive for the economic development of the effects of the second lockdown and the tighter restrictions to fight the pandemic, as well as the supportive measures from the government,” said Albert Braakmann, head of national accounts and prices at the office of statistics.

The statistics office will release official figures for the fourth quarter on January 29.

Manufacturing has been a stronghold for Germany during the crisis, as factories have more easily adapted to health and safety restrictions than businesses that depend on face-to-face interactions. The sector accounts for around one-fifth of total production and is likely to contribute to the recovery once global demand recovers.

Restaurants, hotels and non-essential retailers will remain closed until at least the end of January. Chancellor Angela Merkel has issued private warnings that an additional 10 weeks of lockdown may be needed to curb a new variant of the coronavirus that risks increasing infections. A slow start to vaccination campaigns in the region adds to the uncertainty.

The Bundesbank remains optimistic but Germany’s recovery will continue after a hiatus in the winter half. As economic confidence improves in the eurozone, European Central Bank President Christine Lagarde has also expressed confidence in a monetary bloc rebound this year.

“We want the German economy to return to growth this year,” Economy Minister Peter Altmaier said at a press conference in Berlin after the publication of the GDP. “Perhaps a little less than originally hoped due to the new pandemic epidemic – but a recovery which may lead to others in Europe and the world, and which may contribute to a development positive impact of the global economy. “


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