In 2020-Q4, the second wave of the COVID-19 pandemic has not influenced significantly the GDP of Germany relative to the previous quarter (+0.34%). The country experienced a sharp decline in private consumption which is counteracted by an increase in investments and exports relative to the third quarter of the year. Government spending did not change relative to 2020-Q3, but is significantly higher than in the same period of the previous year, likely reflecting the impact of the measures implemented to alleviate the negative effect of the crisis. Overall, GDP is 3.65% lower than in 2019-Q4, but, according to the OECD economic outlook, it is expected to grow annually by more than 4% from 2021. The unemployment rate is 4.57% (1.37 percentage point higher than in 2019-Q4), suggesting a modest impact of the pandemic on the German labour market. The OECD predicts that unemployment will increase up to 4.9% in the first half of 2021, and will be followed by a gradual decline, as economic activity returns to its pre-crisis levels. Prices are relatively stable.

April 2021