Germany’s economy down by 1.8% in first quarter
06:39, 25 May 2021
Germany’s gross domestic product (GDP) fell by 1.8% in the first quarter of 2021 compared to the last three months of 2020 according to the announcement made by Destatis, the German statistics office, on Tuesday. The decline was sharper than the expected rate of -1.7% announced at the end of April. Compared to the first quarter of 2020, the German economy was down by 3.4%.
“After the German economy had somewhat recovered in the second half of 2020 (+8.7% in the third quarter and +0.5% in the fourth quarter), the coronavirus crisis caused another decline in economic performance at the beginning of 2021,” a spokesperson for Destatis said.
Germany is Europe’s biggest economy and its GDP contraction in the first quarter dragged down the overall economic growth in the Euro zone and EU to -0.6% and -0.4% respectively, according to data released by Eurostat on 18 May.
Consumption drops
“The continuing, and in part intensified, restrictions imposed to contain the coronavirus pandemic had a particularly marked impact on household final consumption expenditure at the beginning of the year,” Destatis’s spokesperson explained.
In the first quarter of 2021, the German households’ final consumption expenditure fell by 5.4% compared to the fourth quarter of 2020 after adjustment for price, seasonal and calendar variations. Government final consumption expenditure was slightly higher than in the previous quarter (+0.2%).
At the same time, Germany’s imports (+3.8% quarter-on-quarter) grew faster than exports (+1.8%).
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Germany expects 3.5% GDP growth this year
Despite poor first-quarter growth, Germany’s government recently upgraded its economic expectations for this year. At the end of April, economy minister Peter Altmaier said that the German government now expected a 3.5% GDP increase this year, compared with a previous forecast of 3%.
“This is the year when we will really be able to see the trend change”, Altmaier said in an interview with DW.com. “We will not only stop the economic slump but reverse it.”
He believes that the economy should pick up during the second half of the year as more people are vaccinated and restrictions are eased. He is also confident that the positive trend will continue next year, with a GDP growth of 3.6%.
German DAX hits new all-time high
The DAX index of Germany’s 30 largest listed companies opened Tuesday’s trading session at a new all-time high of 15,582 points, up 0.8% compared to Friday. The DAX was playing catch up with the rise in global markets yesterday, following the Frankfurt Stock Exchange’s closure for a public holiday on Monday.
On Friday, the DAX closed at 15,437 points, just 100 points below its previous all-time high of 15,538 points set on 18 May.
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