Virus curbs hit German GDP more than expected in Q1

BERLIN (AFP): Germany’s economy fell more than previously thought in the first quarter as coronavirus restrictions caused a drop in private consumption, revised data showed Tuesday.

After two quarters of growth, GDP fell by 1.8% between January and March, national statistics office Destatis said in a statement, revising down their initial prediction of a 1.7% drop.

It was well below pre-pandemic levels, with COVID-19 curbs leading to a 5.4% drop in private consumption, according to the data.

“Needless to say, the worst quarterly performance of the German economy since reunification was mainly the result of stricter lockdown measures since mid-December,” said ING economist Carsten Brzeski, adding that harsh winter weather and a longer-than-usual Christmas break were also factors.

Yet he also added that “the potential for a surge in the second quarter has increased”, as Germany’s vaccination campaign speeds up and the economy begins to open up after months of lockdown.

Germany’s Bundesbank Central Bank also predicted a second-quarter bounce last week, saying that Europe’s largest economy could even surpass pre-pandemic growth levels from the autumn.

The German Government’s forecasts currently predict 3.5% growth in GDP for 2021.