Strong exports and construction boost German economy in the fourth quarter

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Strong exports and solid construction activity helped the German economy to grow by a better-than-expected 0.3% in the final quarter of last year, but stricter lockdown measures at home and abroad are clouding the outlook for Europe’s largest economy.

The data, published by the Federal Statistics Office on Wednesday, marked an upward revision to its earlier estimate for a 0.1% expansion over the previous quarter.

The office also revised upward its 2020 full-year GDP figure to -4.9% from -5.0%.

Adjusted for calendar effects, the German economy shrank by 5.3% last year, a much smaller contraction than in many other European countries, helped by a strong fiscal response to the damage caused by the COVID-19 pandemic.

A debt-financed fiscal splurge created an overall state budget deficit of 139.6 billion euros or 4.2% of gross domestic product in 2020, the office said. This was the first deficit since 2011 and the second-highest since German reunification.

Read Reuters’ full story.