The second lockdown weighs on the German economy

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BERLIN, Germany, Feb.15 (Xinhua) – Ongoing COVID-19 measures continue to weigh on the German economy in the first quarter of 2021, according to the monthly economic report released by the Ministry of Economic Affairs and Energy (BMWi ) Monday.

The recovery from the end of the first COVID-19 lockdown in the spring of last year had “largely come to a halt for the time being following the second lockdown,” BMWi noted.

After a sharp 8.5% increase in the third quarter, Germany’s gross domestic product (GDP) grew only 0.1% in the fourth quarter of last year, according to the Federal Statistical Office (Destatis ).

Germany went into lockdown in November when the second wave of COVID-19 hit the country. Health regulations have since been tightened and the lockdown has been extended until at least March 7. Non-essential shops, restaurants and leisure facilities are closed and strict contact restrictions apply.

The “economic picture remains divided,” noted BMWi. While the German industrial sector has continued to develop vigorously, the service sector, including hospitality, arts and entertainment, has been “severely constrained” by measures to contain the COVID-19 pandemic.

BMWi noted that the further development of the German economy would largely depend on how quickly the increase in the number of infections during the winter could be contained.

Economic growth in the euro area is expected to be 4.9% this year, according to a recent report by the European Association for Research on Macroeconomic Forecasts (EUROFRAME).

A significant economic recovery in Europe is expected to begin when a large portion of the population is vaccinated and COVID-19 infections drop significantly, which is expected from the second quarter, the Kiel Institute for the Economy World (IfW Kiel), which is part of the EUROFRAME Group, noted Monday.

“In the areas of personal services and private consumption there is a lot of potential for catching up”, when it comes to holidays or restaurant visits, said Klaus-Juergen Gern, economics researcher at IfW Kiel , adding “Economic activity in these areas is likely to rebound sharply as soon as the pandemic situation permits.”


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