German Economy Shrinks In Q4

The German economy shrank in the fourth quarter as the preventive measures imposed amid the fourth wave of the pandemic weighed on household spending, revised data from Destatis showed on Friday. Nonetheless, the pace of contraction was much slower than the previous estimate.

Gross domestic product fell 0.3 percent sequentially, in contrast to the 1.7 percent increase in the third quarter. Nonetheless, this was much slower than the 0.7 percent decline estimated initially.

Due to the restrictions imposed in the course of the fourth wave of the pandemic, household consumption declined 1.8 percent after two quarters of considerable increases. On the other hand, government expenditure increased 1.0 percent.

Gross fixed capital formation in machinery and equipment was up 0.9 percent and that in construction remained roughly at the previous quarter’s level.

Exports of goods and services were up 4.8 percent and imports rose slightly more by 5.1 percent.

GDP advanced by the price-adjusted 1.8 percent from the last year, following the third quarter’s 2.8 percent increase.

Similarly, calendar-adjusted GDP growth eased to 1.8 percent from 2.9 percent in the prior quarter. The rate was revised up from 1.4 percent.

The delivery bottlenecks and the worsening of the Covid-19 situation at the end of the year slowed growth in 2021. In the whole year of 2021, GDP grew by unrevised 2.8 percent.

In the latest monthly report, released Monday, Bundesbank said the economic output is set to decline noticeably in the fourth quarter.

Nonetheless, the economy will pick up speed again in the spring, provided the pandemic subsides and the supply bottlenecks continue to ease.

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