German GDP still smaller than before Covid struck

As the UK celebrates its full economic recovery from the pandemic, Germany must drown its sorrows amid rumors it could fall into recession again



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As the UK celebrated its full economic recovery from the pandemic, Germany had to drown its sorrows amid rumors it could slip back into recession.

Unlike the UK, Europe’s largest economy shrank by up to 1 percent in the last three months of 2021 due to severe coronavirus restrictions and supply chain disruptions.

Data from the country’s Federal Statistical Office (FSO) shows that Germany’s gross domestic product (GDP) increased by 2.7 percent last year. However, it was still 2 percent below pre-pandemic levels. Analysts estimate that GDP fell 0.5 to 1 percent in the fourth quarter.

On the brink: Unlike the UK, Europe's largest economy shrank by as much as 1 percent in the last three months of 2021

On the brink: Unlike the UK, Europe’s largest economy shrank by as much as 1 percent in the last three months of 2021

The situation is so bad that Deutsche Bank predicts that German GDP will fall by about 0.5 percent in the first quarter of 2022, pushing the country back into recession.

In 2020, German GDP fell 4.6 percent as the pandemic triggered the worst recession since World War II.

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

“Despite the ongoing pandemic situation, increased supply difficulties and material shortages, the German economy has managed to recover from last year’s sharp decline, although economic performance has not yet reached pre-crisis levels,” said FSO chairman Georg. Thiel.

The country’s vast manufacturing industry has been held back as supply chain disruptions robbed it of key materials and components such as semiconductors, computer chips used in everything from cars to cell phones.

Private sector consumption also stagnated during the year, despite an improvement in the labor market as inflation weighed on disposable income for German consumers.

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