German economy shrank 5% in pandemic year 2020

FRANKFURT: The German economy, Europe’s largest, shrank by 5 percent in the pandemic year 2020, ending a decade of growth as lockdowns wiped out much business and consumer activity. As dreary as they were, the numbers suggest consumers could be ready to unleash a strong recovery when the lid finally comes off.
The statistics office Destatis said Thursday that only the construction sector showed an upturn as industry and services saw deep declines. Agriculture, financial services, real estate and information and communication suffered smaller drops in output.
Industry fell 9.7 percent while services including cultural and sporting events, which have suffered widespread cancelations, fell 11.3 percent.
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 percent during 2020. Albert Braakmann, head of the group for economic estimates and prices, said consumption “could increase significantly.”
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 Jan. 29.
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 percent The 2020 figure compares to modest growth of 0.6 percent 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 percent followed by a rebound of 8.2 percent in the third.