In the second year of the corona pandemic, Germany fared better than initially assumed. Last year, the state spent 132.5 billion euros more than it took in. Based on the total economic output, the deficit of the federal, state, municipal and social security funds was 3.7 percent, as the Federal Statistical Office announced on Friday. It was therefore lower than initially calculated at 4.3 percent.
Compared to the previous year, the deficit in 2021 fell by 12.8 billion euros. The federal government recorded the biggest minus of 143.4 billion euros in view of the high costs of the corona pandemic. On the other hand, the federal states, municipalities and social security funds were slightly up, also due to high transfers from the federal government. In the Corona crisis year 2020, Germany had to post a budget deficit for the first time since 2011.
At the end of 2021, the fourth corona wave choked off the economic recovery in Europe’s largest economy. The gross domestic product (GDP) shrank by 0.3 percent in the fourth quarter compared to the previous quarter, as the Federal Statistical Office also announced on Friday. In a first estimate, however, the authority had assumed a decline of 0.7 percent.
In the period from October to the end of December 2021, stricter restrictions due to the fourth corona wave had a particularly negative impact on the retail and hospitality sectors. Private consumption, an important pillar of the economy, fell compared to the previous quarter. Bottlenecks in raw materials and preliminary products such as semiconductors also hit industry. Despite the decline in the fourth quarter, the German economy grew by 2.9 percent for the year as a whole, according to the latest data, after a slump in the first Corona year 2020.
The economic outlook for the coming months has clouded over as a result of the Russian attack on Ukraine. After what is expected to be a weak winter quarter in 2022, the conflict could slow down the hoped-for spring upswing. The German Chamber of Industry and Commerce fears serious economic consequences. According to economists, growing uncertainty and rising energy prices are poison for the upswing. “We assume that the real economy around the world will have to accept noticeable losses,” said the Landesbank Baden-Württemberg (LBBW). (dpa)