Germany’s economy contracted by 5% in 2020 occasioned by the global coronavirus pandemic. This was the country’s deepest contraction in over a decade.
As the BBC reports, there were severe falls in household spending (6%) and in investment in machinery and equipment (12.5%). Germany is a leading exporter, particularly manufactured goods, and sales abroad fell by 10%. An increase in construction partly offset those declines.
There was also an increase in government spending, as Berlin sought to limit the extent of the economic damage.
The pandemic’s first wave caused the worst quarterly drop in GDP on record, when output plummeted 9.8% in the three months from April to June 2020. But the economy recovered, expanding by 8.5% in the third quarter, before slowing down again following a resurgence of the virus.
The 2020 German slump is smaller than others recorded in France, Italy or Spain, where GDP is projected to have declined by 9.3%, 9% and 11.1%, respectively, according to European Central Bank (ECB) forecasts.
Looking ahead, the German government is upbeat, having forecast growth of 4.4% in 2021 and 2.5% in 2022.