German economy suffers biggest blow since financial crisis

FRANKFURT AM MAIN: Germany’s economy suffered its biggest contraction last year since the 2009 financial crash but the pandemic-induced slump was limited thanks to its manufacturing strength, official data showed on Thursday.

Output shrank 5.0 per cent in 2020 as “almost all economic sectors were markedly affected by the corona pandemic”, the federal statistics agency Destatis said.

The figure was better than the government’s own forecast for a decline of 5.5 per cent but the downturn still ended 10 consecutive years of growth, Destatis added.

In 2009, in the midst of a global economic crisis, gross domestic product (GDP) had plunged by 5.7 per cent.

Like its neighbours, the country of 83 million people has been hit hard by a resurgence in coronavirus cases, prompting the shuttering of bars, gyms, cultural and leisure centres in November, followed by schools and nonessential shops in December.

But Germany’s Economy Minister Peter Altmaier told reporters that the second shutdown had “less impact on the real economy than in the spring, which makes me optimistic that we can manage to deal with the pandemic in such a way that it does not prevent the economic recovery.

“Overall I am firmly convinced that the year’s growth will be significant and noticeable,” he added.

The 2020 German slump is smaller than others recorded in France, Italy or Spain, at 9.3, 9.0 and 11.1 per cent respectively, according to the European Central Bank.

“Measured against the original fears after the outbreak of the pandemic, this sad result is also a success in damage limitation,” said Fritzi Koehlergeib, chief economist at the KFW public bank.