During the fourth quarter of 2020, Germany's GDP recorded an improvement in its y/y variation rate compared to the previous quarter, although it remained negative at -3.64%. This recovery was significantly smaller than the one recorded during the previous quarter due to the increase in infections that led to a tightening of pandemic containment measures. As for the labor market, the unemployment rate registered an increase over the previous quarter, up to a rate of 4.57%, while the y/y employment variation decreased down to -1.64%. As for inflation, it registered a rate of -0.25%, after decelerating with respect to 3Q20. Finally, the euro appreciated against the US dollar compared to the previous quarter, and recorded an average exchange rate of 1.19 $/€ during the fourth quarter of the year.

 


Macroeconomic outlook report: Germany 4Q20

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Macroeconomic overview

  • During the fourth quarter of the year, the German economy recorded an increase in its y/y GDP variation rate of 0.35 p.p. compared to the previous quarter, up to a rate of -3.64%. This recovery was significantly smaller than in the previous quarter due to an increase in infections that lead to a tightening of pandemic containment measures.
  • Domestic demand reached a rate of -4.31% after decreasing by 0.50 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 4.38 p.p. with respect to the previous quarter, although it continued registering a negative growth rate of 5.10%. Imports also developed positively, although to a lesser extent, with a variation of 3.06 p.p. to -6.83%.
  • With regards to the labor market, the unemployment rate increased compared to the previous quarter to a rate of 4.57%, while the y/y employment variation decreased by 0.04 p.p. compared to the previous quarter, down to a rate of -1.64%.
  • The euro appreciated against the US dollar compared to the third quarter of 2020, recording an average exchange rate of 1.19 $/€ in 4Q20.
  • Inflation stood at -0.25% during the fourth quarter of 2020, after recording a decrease of 0.16 p.p. compared to the previous quarter.

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