German economy slumped by 5% in 2020

Photo: EPA German service sector shrank by 11.3% in 2020.

The German economy ended a decade of steady growth as the country suffered from lockdowns, related to pandemic. Europe’s largest economy reported a slide of 5% for 2020, AP reported quoting official statistics data.

The only sector which posted modest growth was construction while industry and services were both on the downside. Agriculture and finance were also badly affected. According to statistics data consumer spending was low in 2020 but however experts commented that a robust rebound is seen once prospects for increased Covid-19 infections change.

Industry fell 9.7% while services including cultural and sporting events, which have suffered widespread cancellations, fell 11.3%. Looking ahead, the stage could be set for a substantial economic rebound since consumers might be ready to spend once the pandemic recedes, having increased their saving rate to a historic high of 16.3% during 2020.  In the fourth quarter, growth “roughly stagnated,” said Michael Kuhn, head of the GDP and output calculation group at the agency. He said that since very little data was available for December, when the latest round of lockdowns hit, the agency was not making an official estimate. The fourth-quarter figure is to be announced on 29 Jan.  The pandemic downturn, which followed 10 straight years of annual growth, was smaller than that experienced during 2009, when the economy shrank by 5.7%. The 2020 figure compares to modest growth of 0.6% in 2019.

In 2020, the economy seesawed between lockdowns and a robust upswing that still left growth below the previous year. The worst quarter, the second, saw a quarter-on-quarter plunge of 9.8% followed by a rebound of 8.2% in the third.

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