The German economy ended up having a recession lower than that of 2009 in 2020. The Gross Domestic Product (GDP) of the biggest economy in the euro fell 5% last year, according to the preliminary estimate published this Thursday by Destatis, the Federal Institute of Statistics. In 2009, after the great international financial crisis of 2008, the German economy retreated 5.7%.
The collapse motivated by the covid-19 pandemic ended up below most forecasts that pointed to a fall between 5.6% (advanced by the European Commission in November) and 6% (according to the International Monetary Fund in October). The drop in GDP ended up being even below the 5.8% forecast presented by Angela Merkel’s government in October in the 2021 budget proposal sent to Brussels.
The 2020 recession follows an almost stagnation of the German economy in 2019 (GDP grew only 0.6%) and a decade of weak growth (GDP increased by an average of 1.9% between 2010 and 2019).
Deficit returns to German accounts
With the 2020 recession, the budget deficit also returned, after eight years of surpluses. According to Destatis’ preliminary estimate, the deficit was 4.8% of GDP. The second largest since 1995. Even so it was below forecasts that pointed to a deficit of 6%.
The Institute did not publish the forecast for the fourth quarter this Thursday, which it will only do on January 29. Measured in the chain variation (from quarter to quarter), German GDP fell 1.9% in the first quarter, sank 9.8% between April and June, and recovered 8.5% in the third quarter.
Germany is the first major economy to publish preliminary estimates of the 2020 recession. The United States will release the forecast on January 30 and Spain the day before. The National Statistics Institute’s estimate for Portuguese GDP is forecast for February 2.
The German government’s forecasts point to a two-year recovery from the collapse of 2020. According to the German Ministry of Finance, GDP is expected to grow 4.4% in 2021 and 1.5% in 2022.
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