Tuesday, May 17

Germany: growth reached 2.8% in 2021

Initially optimistic, German growth forecasts have been steadily downgraded by pundits over the past yearJohn MACDOUGALL

Germany’s gross domestic product (GDP) grew 2.8% in 2021, with a 0.7% plunge in the fourth quarter due to industry-hindering shortages and coronavirus pandemic restrictions, figures show preliminary published on Friday.

“After returning to growth during the summer, despite growing difficulties due to shortages of materials, the recovery was halted by the fourth wave of coronavirus”, explains the statistical institute Destatis in a press release.

This fall comes after a 1.7% increase in GDP between July and September, according to data revised by Destatis.

In total, in 2021, German economic activity grew by 2.8%, after an upward revision of 0.1 point by Destatis.

This is significantly less than in neighboring countries such as France, which experienced growth of 7% in 2021.

Shortages of raw materials and components have hit traditional manufacturing power hard.

In the automotive sector, the lack of semiconductors led to intermittent shutdowns at car factories and caused a 10.1% drop in sales in Germany, according to the VDA federation.

And restrictions imposed by the government at the end of the year to combat the fourth wave of coronavirus have dampened demand for services.

“With this weak fourth quarter, the likelihood of Germany being in outright recession at the start of the year has increased,” said Carsten Brzeski, head of macroeconomics at ING bank.

Any recession – that is to say two quarters in a row of decline in GDP – would however be “short-lived”, before the economy makes “an impressive comeback in the spring”, he adds.

Taking into account a slower than expected start to 2022, the Ministry of Economy and Climate revised its growth forecast for 2022 earlier this week to 3.6%, against 4.1% estimated last October. .


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