Germany: Economy avoids double-dip recession in Q4
The German economy expanded 0.1% quarter-on-quarter in the fourth quarter of last year, despite the reintroduction of lockdown measures to curb the second wave of the coronavirus, according to preliminary data. That said, the print was down markedly from the third quarter’s historic 8.5% rebound. On an annual basis, the economy was down 2.9% in the fourth quarter (Q3: -3.9% year-on-year).
Although a breakdown has not yet been released, available data suggests that the quarterly result was driven by the external sector, with exports of goods and services expected to have buttressed the economy once again. On the other hand, domestic demand likely softened due to the restrictive measures that were put in place. In particular, household consumption is expected to have suffered. A detailed breakdown of national accounts data for the fourth quarter is scheduled to be released on 24 February.
The German economy expanded 0.1% quarter-on-quarter in the fourth quarter of last year, despite the reintroduction of lockdown measures to curb the second wave of the coronavirus, according to preliminary data. That said, the print was down markedly from the third quarter’s historic 8.5% rebound. On an annual basis, the economy was down 2.9% in the fourth quarter (Q3: -3.9% year-on-year).
Although a breakdown has not yet been released, available data suggests that the quarterly result was driven by the external sector, with exports of goods and services expected to have buttressed the economy once again. On the other hand, domestic demand likely softened due to the restrictive measures that were put in place. In particular, household consumption is expected to have suffered. A detailed breakdown of national accounts data for the fourth quarter is scheduled to be released on 24 February.
Looking at 2020 as a whole, annual output dropped for the first time since the aftermath of the global financial crisis, with GDP contracting 5.0%. Turning to this year, the government recently announced the extension of lockdown measures and this will have a notable bearing on economic activity in the first quarter. However, the rollout of vaccination programs and the subsequent removal of restrictions globally will firm domestic and foreign demand, leading to a bounce-back in activity. That said, the balance of risks remains tilted to the downside amid lingering uncertainty over potential future waves of the virus, and the speed and efficacy of the vaccine rollout. Moreover, questions remain over the strength of the global economic recovery.