German economy grows strongly in Q3 2020

The German economy grew strongly in the third quarter. On a quarter-on-quarter basis, the GDP rose 8.2 percent, as compared with consensus expectations of 7.3 percent. The German economy has made up for nearly two-thirds of the Corona related slump.

Statisticians stated that the rise was because of consumer spending as well as investment in machinery and equipment and exports. The net impact of revisions of previous data was a bit positive. The pronounced economic recovery in the course of the second quarter was mainly the factor for the strong rise seen in the third quarter, noted Commerzbank in a research report. For instance, revenues of the non-financial business sector had rebounded solidly following the easing of corona restrictions, especially in May and June. Therefore, revenues at the start of the September quarter were already above the average for the second quarter.

“According to our estimates, the state-ordered closure of restaurants, pubs, hotels, theatres, cinemas, etc. as well as stricter regulations for retailers will cause GDP to fall by 1 percent in the fourth quarter. We have assumed that the lockdown will end at the end of November, as the government had promised. However, since new infections usually react to a lockdown with a delay and the government wants to see progress in this area, the restrictions could also affect December. Q4 GDP would then quickly fall by 2 percent instead of 1 percent. Growth would then decline below zero in the fourth quarter”, stated Commerzbank.