Brussels (Brussels Morning) The global coronavirus pandemic wiped out 5% of Germany’s GDP in 2020, the state statistics office Destatis reported on Thursday. While significant, the hit was less severe than the contraction experienced by the German economy during the 2008 global financial crisis, and also less than what most analysts had expected, Reuters reports.
Supported by unprecedented government rescue and stimulus measures, the German economy fared much better than that of European economic powerhouses France, Italy and Spain. In addition, a record uptick in citizen savings was recorded in 2020, with savings rate growing 16.3%. This offers the potential for a substantial economic rebound given that consumers might resume spending once the pandemic recedes.
A year of disaster
According to Destatis, only the construction sector showed signs of growth, while the services and industry sectors both shrank faster than the rest of the economy. Sectors such as agriculture, financial services, real estate and information and communications, registered significantly smaller drops in output.
“It was actually a year of disaster, but judging by what had been feared in the course of the year, one could say we got off lightly,” LBBW analyst Uwe Burkert declared.
Decade of growth
The downturn marked an end to ten straight years of economic growth, yet fell short of the record breaking 5.7% decline recorded in 2009. Destatis estimates that the final quarter of 2020 saw economic stagnation, but an upward trajectory which will likely spill over into 2021.
The German government managed to soften the economic blow by abandoning frugality and suspending constitutional limits on budget deficits, which freed the federal states and the central government to go on a borrowing spree, running up a 158.2-billion euro deficit in 2020. In 2019, Germany had a budget surplus of 52.5 billion euro.