Almost every major sector except construction was affected by a decline last year.
Household spending fell and business investment shrank the most since the financial crisis. Exports and imports of goods and services fell for the first time since 2009, shrinking 9.9% and 8.6%, respectively.
But the lower-than-expected decline in GDP shows the value of Germany̵7;s industrial backbone, which makes it less reliant on services and consumption than countries like the United States, Britain. France, Italy and Spain
“Clearly, the strength in the export-oriented manufacturing sector offset the impact of the disruption,” Commerzbank chief economist JörgKrämer wrote in a note to clients on Thursday.
The German government has shut down restaurants, bars and clubs for a second time since early November in an effort to contain the rising coronavirus infection. Unnecessary shops, services and schools were closed in mid-December and remained closed.
“Germany’s better performance reflects little disruption during the first wave of COVID-19, low tourism and service share in a strong export economy and support for the economy.” Generous finance, ”adds Andrew Kenningham, Head of Economics at Capital Economics.
However, the short-term outlook for Germany’s economy is less encouraging.
Release restrictions remain in effect and German Chancellor Angela Merkel warned this week that it could not be eased for weeks.
“At the moment it seems that the German economy will avoid being a black eye in the last quarter of 2020, but it is difficult to see how the same magic can be reused in the first quarter,” said Carsten Brzeski, head of economic research at the international level. The ING world wrote in the memo.
“Economic activity tended to decline again in the first quarter,” added Kenningham. “While manufacturers should benefit from continued strong external demand. But the scope of catch-up growth will be reduced as output draws closer to pre-epidemic levels.
The blockade will also boost savings in the country, which could further impact the economy if households spend some extra cash, said Commerzbank’s Krämer.
This will help German GDP return to pre-epidemic levels by the final quarter of 2021, six to nine months before the European economy widens, Kenningham added.