26.05.2021 – 08:51
The second closure to alleviate the pandemic slowed the German economy earlier in the year. The economic downturn turned out to be somewhat stronger than previously assumed.
The second closure to alleviate the pandemic slowed the German economy earlier in the year. The economic downturn turned out to be somewhat stronger than previously assumed. Gross domestic product, in the first quarter of 2021, decreased by 1.8 percent, compared to the previous quarter, as announced by the Federal Bureau of Statistics on Tuesday. In a previous preliminary calculation the decline was 1.7 percent.
Germany thus had a relatively weak start to the year compared to the euro area, which suffered a loss of only 0.6 percent, while the world’s largest economy, the US, grew by 1.6 percent, also thanks to rapid vaccination.
Private consumption at a loss
In particular, private consumption, which is normally a solid pillar of the domestic economy, has suffered losses. Prolonged and somewhat tightening restrictions on the fight against the pandemic slowed down especially the retail, hotel and restaurant turnover: private consumption fell by 5.4 percent compared to the previous quarter.
The increase of the value added tax (VAT) to the previous level also had a negative effect. Consumers had made large purchases before, in the second half of 2020, when VAT was reduced as a measure to raise the conjuncture. These purchases were missing in consumption statistics for the first quarter of the current year.
On the other hand, foreign trade benefited from the increase in global demand. But here imports of goods and services increased significantly (plus 3.8 percent) more than exports (plus 1.8 percent). However, companies reduced their investments in machinery, equipment, vehicles and equipment by 0.2 percent. Government consumption increased by 0.2 percent, while investment in construction increased by 1.1 percent.
The latest pandemic strikes?
After the early fall of the Corona crisis in the spring of 2020, Europe’s largest economy initially grew for two consecutive quarters. “As bitter as the setbacks were in the first quarter of this year, they were the last at the moment,” says VP Bank chief economist Thomas Gitzel. “The significant decline in incidence and increased immunization of large sections of the population will make it possible to open up. A relaxed summer is approaching, which will bring more money to the cash registers. ”
The semiconductor materials market has fallen sharply, with Germany’s automotive industry suffering the most.
The weak point of the economy, however, remains the lack of materials, according to Gitzel. “The acute shortage of semiconductor materials has become a serious test for the German automotive industry – at least in the short term,” Gitzel said. But there is also a shortage of materials in the construction industry, ranging from wood to paint. “The good news, however, is that the recovery effects in the services sector will be so strong that, in macroeconomic terms, they will also offset the losses caused by material shortages in the industry.”
In its most recent forecast, the federal government estimated an increase of nearly 3.5 percent. Economic output fell last year by about 5 percent. But the Federal Bank predicts that pre-crisis levels will be reached again next year./DW