During the first quarter of 2021, Germany's GDP recorded an improvement in its y/y variation rate compared to the previous quarter, although it remained negative at -3.10%. The recovery was marginal due to the resurgent infection rates and the associated gradual tightening of containment measures. As for the labor market, the unemployment rate registered a decrease over the previous quarter, down to a rate of 4.57%, while the y/y employment variation decreased down to -1.58%. As for inflation, it registered a rate of 1.36%, after accelerating with respect to 4Q20. Finally, the euro appreciated against the US dollar compared to the previous quarter, and recorded an average exchange rate of 1.21 $/€ during the first quarter of the year.


Macroeconomic outlook report: Germany 1Q21

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Macroeconomic overview

  • During the first quarter of the year, the German economy recorded an increase in its y/y GDP variation rate of 0.18 p.p. compared to the previous quarter, up to a rate of -3.10%. After the strong recovery in 3Q20, overall economic activity in Germany increased more moderately in 4Q20 and 1Q21 due to the tightening of pandemic containment measures.
  • Domestic demand reached a rate of -4.36% after decreasing by 0.29 p.p. This was mainly due to the fall in private consumption, which was notably affected by the containment measures. With respect to external demand, exports recorded an increase of 5.04 p.p. with respect to the previous quarter, although it continued registering a negative growth rate of -0.18%. Imports also developed positively, although to a lesser extent, with a variation of 4.65 p.p. to -2.66%.
  • With regards to the labor market, the unemployment rate decreased compared to the previous quarter to a rate of 4.57%, while the y/y employment variation decreased by 0.09 p.p. compared to the previous quarter, down to a rate of -1.58%.
  • The euro appreciated against the US dollar compared to the fourth quarter of 2020, recording an average exchange rate of 1.21 $/€ in 1Q21.
  • Inflation stood at 1.36% during the first quarter of 2021, after recording an increase of 1.61 p.p. compared to the previous quarter.

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