Berlin, Feb. 25, (dpa/GNA) – The German economy shrank by 0.3% in the final quarter of 2021, compared to the previous quarter, the statistics agency reported on Friday, as Europe’s biggest economy weathered the ongoing Covid-19 crisis better than expected.
With the announcement, the Federal Statistical Office (Destatis) revised upwards its first estimate of a 0.7% contraction for the period. Growth during the year as a whole came in at 2.9%, marginally up from the 2.8% posted in the first estimate.
Destatis attributed the contraction in the fourth quarter to the fourth wave of the coronavirus pandemic, which had halted the recovery seen earlier in the year.
A decline in consumer expenditure following two-quarters of increases was the main factor driving the fourth-quarter decline, while state expenditure and investment in plant, equipment and vehicles acted as stabilizing factors. Construction was roughly level with the third quarter.
Trade rose during the quarter, with exports up 4.8% on the quarter on an adjusted basis. Imports were up 5.1%, driven by an increase in imported services.
The agency also reported on Friday that spending during the pandemic had less of an impact on state coffers than previously thought.
The German government’s fiscal deficit amounted to €132.5 billion ($148.5 billion) in 2021, or 3.7% of gross domestic product, according to provisional calculations. Destatis’ first estimate had been a deficit of 4.3%.
Revenues rose by 8.9%, while expenditures were up 7.4% compared with 2020. Revenues from taxation rose sharply by 12.9%, based largely on increased revenues from corporation tax.
Concerns about price rises are increasing in inflation-conscious Germany. The Ifo institute predicted on Friday that consumer inflation would top 5% this year, driven by rising prices for oil and gas caused by the war in Ukraine.
“A five in front of the decimal point for the inflation rate is currently more likely than a three,” Ifo analyst Timo Wollmershäuser says.
Even before the Russian invasion of Ukraine this week, many German companies were telling Ifo analysts they planned to raise prices, with immediate effects on consumers.
According to Ifo surveys taken before the war started, two-thirds of companies in the retail sector planned to up their prices, with as many as 85% planning to do so in the food sector. Across all sectors, 47.1% of companies had price rises in the pipeline.
GNA