German GDP grew more than expected in the fourth quarter

According to the report from the Federal Statistical Office (Destatis), the gross domestic product (GDP) rose by 0.3% in the fourth quarter of 2020 compared with the third quarter of 2020 after adjustment for price, seasonal and calendar variations. Economists had expected a 0.1% increase. After the historic 9.7% slump of the GDP in the second quarter of 2020, the German economy had recovered in the third quarter of 2020 (+8.5%). In the fourth quarter, however, the recovery process slowed due to the second coronavirus wave and another lockdown imposed at the end of the year. According to figures from Destatis, the GDP development was slightly more positive than reported in the first release of 29 January 2021, both regarding the fourth quarter (+0.3%) and the entire year of 2020 (-4.9%; calendar-adjusted: -5.3%).

Due to the restrictions of the second lockdown as of November 2020, household final consumption expenditure in the fourth quarter of 2020 was down 3.3% on the third quarter of 2020 after price, seasonal and calendar adjustment. This means that the decrease of household final consumption expenditure was smaller than in the second quarter of 2020 (-11.0%). Government final consumption expenditure, too, recorded a 0.5% quarter-on-quarter decrease in the fourth quarter of 2020, following increases in the first three quarters of the year. Gross fixed capital formation in construction contributed to growth in the fourth quarter of 2020 as it rose 1.8% on the third quarter of 2020 after price, seasonal and calendar adjustment. Seasonally adjusted gross fixed capital formation in machinery and equipment was roughly the same as in the previous quarter (-0.1%).

Foreign trade increased at the end of the year and had an upward effect on the GDP. In the fourth quarter of 2020, exports of goods and services were up 4.5% compared with the third quarter of 2020, after price, seasonal and calendar adjustment. The total increase of imports (3.7%) was slightly smaller as the imports of services was down on the previous quarter.