German Economy Is Still 2% Smaller Than Before Pandemic

The German economy, Europe’s largest, is still 2% smaller than in 2019, before the Covid-19 pandemic halted activity and plunged the country into an unprecedented recession. Uncertainty over resurgent coronavirus infections and restrictions, an inflation surge and supply shortages mean private consumption remained nearly 6% below pre-crisis levels in 2021, while the gap for equipment investment exceeded 8%. Output shrank as much as 1% in the fourth quarter and is likely to contract again in the three months through March, putting the economy on track for a recession.

Sign up for the New Economy Daily newsletter, follow us @economics and subscribe to our podcast.