Germany’s economy shrank by 5.0 percent year-on-year in 2020, the most since the financial and economic crisis of 2008/2009 and compared with market expectations of a 5.1 percent contraction, a preliminary estimate showed.
The economic downturn was particularly evident in the service sectors; as strict restrictive measures were imposed to curb the rapid spread of the coronavirus pandemic. Private consumer spending tumbled 6.0 percent and fixed investment slumped 3.5 percent led by a 12.5 percent fall in equipment investment.
At the same time, net external demand contributed negatively to the GDP with exports and imports declining for the first time since 2009, and service imports tumbling due to a sharp decrease in travel. Government consumption, however, grew at a faster pace at 3.4 percent exceeding 2.7 percent recorded in 2019, due to higher spending on protective equipment and hospital services.