German economy suffers historic collapse: Biggest GDP drop since Second World War | World | News

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The German economy shrank by 5 percent in 2020 due to financial havoc caused by the covid pandemic, preliminary data from the statistics office showed today. This is despite the Chancellor’s coalition Government’s effort to unleash an unprecedented array of rescue and stimulus measures in Europe’s biggest economy to help companies and consumers make it through the crisis. Veronika Grimm from the Expert Council for the Assessment of Overall Economic Development said: “The year 2020 was an exceptional situation.

 “Stabilisers such as short-time work prevented bankruptcies and a slump in the labour market with the bridging aid.”

She added a second wave of the deadly coronavirus pandemic, which included a lockdown added to the struggle for the economy to recover.

However, Ms Grimm added exports continued to do thrive despite the pandemic.

She said: “And the Germans consume a lot differently than in the spring.”

But hospitality, culture and travel sectors, which have been closed since November, only contributed around five percent to economic output.

The losses from these sectors are expected to be made up by state aid.

Exports plunged nearly 10 percent while imports dropped 8.6%, the office said. This suggests that Germany’s large trade surplus, and with it the wider current account surplus, narrowed due to the pandemic.

The only bright spots came from government spending, which pushed up state consumption by 3.4 percent, and construction, where investment in building rose 1.5 percent the data showed.

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