The German economy logged only a moderate recovery in 2021 amid the Covid-19 restrictions and supply chain disruptions weighing heavily on German industries, data published by Destatis showed on Friday.
Gross domestic product grew 2.7 percent in 2021, in contrast to the 4.6 percent decline in the previous year. The annual growth matched economists’ expectations.
Similarly, calendar-adjusted GDP advanced 2.7 percent in 2021, reversing a 4.9 percent fall in 2020.
GDP was still 2.0 percent lower in 2021 than in 2019, the year before the Covid-19 crisis began.
“The economic development was highly dependent on Covid-19 infection rates and the associated preventive measures also in 2021,” said Georg Thiel, President of the Federal Statistical Office, at the press conference.
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, Thiel added.
Carsten Brzeski, an ING economist said, the annual numbers mask a contraction in the economy in the final quarter of 2021, emphasizing the high risk for the economy to fall into an outright recession at the turn of the year.
Data underlines that Germany’s recovery has lagged many of its peers, including the US, France and the UK, Andrew Kenningham, an economist at Capital Economics, said.
The economist said prospects for 2022 depend largely on the pandemic and supply chain problems. German GDP will expand around 3.5 percent this year, which is well below the central bank’s projection of 4.2 percent.
On the expenditure-side, data showed that household spending was up 3.1 percent and government consumption surged 6.6 percent in 2021.Gross fixed capital formation rebounded 6.4 percent.
At the same time, exports and imports grew 15.3 percent and 16.7 percent, respectively.
Destatis is slated to issue the fourth quarter GDP data on January 28. Nonetheless, the agency said the economy contracted between 0.5 percent and 1.0 percent in the final quarter of 2021.
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