German GDP still smaller than before Covid struck

WHILE the UK celebrated its full economic recovery from the pandemic, Germany was left to drown its sorrows amid talk that it could again tip into recession.

Unlike the UK, Europe’s largest economy shrank by up to 1pc in the final three months of 2021 hit by heavy coronavirus restrictions and supply chain disruptions.

Data from the country’s Federal Statistical Office (FSO) showed that German Gross Domestic Product (GDP) rose 2.7pc last year. However, it was still 2pc below prepandemic levels. Analysts estimated that GDP had declined between 0.5pc and 1pc in the fourth quarter.

So bad is the situation that Deutsche Bank predicts German GDP will fall by around 0.5pc in the first quarter of 2022, pushing the country into recession again.

In 2020 German GDP declined by 4.6pc as the pandemic triggered its biggest recession since the Second World War.

GDP in the UK, meanwhile, rose to pre-pandemic levels for the first time after growing by 0.9pc in November.

‘Despite the continuing pandemic situation, more delivery bottlenecks and material shortages, the German economy managed to recover from the sharp fall last year although the economic performance has not yet reached its pre-crisis level again’, said FSO president Georg Thiel.

The country’s vast manufacturing industry has been held back as disruption to supply chains deprived it of key materials and components such as semiconductors, computer chips that are used in everything from cars to mobile phones.

Consumption in the private sector also stagnated during the year despite an improvement in the labour market as inflation weighed on the amount of disposable income for German consumers.