German economy sees record growth in third quarter

The German economy grew by a record 8.2 per cent in the third quarter as Europe’s largest economy partly recovered from its worst-ever recession caused by the Covid-19 pandemic, data from the Federal Statistics Office showed on Friday.

The jump in output from July to September was the biggest since the office began collecting quarterly growth data in 1970 and was stronger than the 7.3 per cent increase predicted by economists in a Reuters poll.

It followed an unprecedented drop of nearly 10 per cent in the second quarter as household spending, company investments and trade collapsed during the first wave of the pandemic.

The bigger-than-expected rebound in the third quarter was driven by higher private consumption, rebounding investments in equipment and very strong exports, the statistics office said.

Separately, the German government on Friday revised upwards its estimate for gross domestic product this year.

It now expects GDP to shrink by 5.5 per cent in 2020 compared with a previous estimate for a 5.8 per cent decline. Adjusted for calendar effects, it sees the economy shrinking by 5.9 per cent.

The government confirmed its 2021 forecast for the economy to grow by 4.4 per cent.