Strong exports, construction boost German economy

Bullish exports and solid construction activity helped the German economy to grow by a stronger-than-expected 0.3 per cent in the final quarter of last year, the Federal Statistics Office said on Wednesday, revising an earlier estimate. The office, which previously had reported a 0.1 per cent expansion on the quarter from October to December, said it also revised upward its 2020 full-year GDP figure for Europe's largest economy to -4.9 per cent from -5 per cent.

Adjusted for calendar effects, the economy last year shrank by 5.3 per cent, which was a much smaller contraction than many other European countries recorded, mainly due to a strong fiscal response of chancellor Angela Merkel’s government to the Covid-19 pandemic.

The debt-financed fiscal splurge created an overall state budget deficit of €139.6 billion or 4.2 per cent of gross domestic product in 2020, the office said. This was the first deficit since 2011 and the second-highest since German reunification. - Reuters