08:40 28/08/2021
Consumer demand has helped boost the German economy after the easing of the coronavirus lockdown. High public spending, meanwhile, has opened a hole in state spending figures.
The German economy grew by 1.6% in the second quarter of 2021, thanks mainly to domestic consumer spending, following the spring easing of the coronavirus lockdown.
The growth has helped the German economy emerge from a low economic level, after the contraction at the beginning of the year.
Meanwhile, state spending soared, as both state and federal governments and local bodies shouldered the brunt of the pandemic's economic burden. What do the numbers show?
The crisis had triggered a decline in economic performance to the extent of minus 2% for the first quarter of 2021.
The Gross Domestic Product increased
On Tuesday, the Federal Statistics Office published that the Gross Domestic Product increased by 1.6% between April and June, compared to the previous quarter.
With the gradual easing of lockdown measures in the spring, final consumption expenditure in the second quarter of 2021 increased significantly compared to the beginning of the year.
Two main factors helped spur the economy's recovery. Household consumption spending rose 3.2% in the first quarter, while a measure of government spending rose 1.8%.
The effects of the pandemic, however, are still visible. Compared to the fourth quarter of 2019 – the quarter before the start of the coronavirus crisis – GDP is 3.3% lower.
The 'dark side' of economic recovery
Public spending to mitigate the economic consequences of the crisis left an 80.9 billion euro hole in public finances for the first half of 2021.
This amount corresponds to a public sector deficit of 4.7% of GDP – the largest in the last 26 years.
The chief economist of ING bank, Carsten Brzeski, told the DPA news agency that he saw the large public deficit as "the dark side of the rapid economic recovery".
"Since it is the state that bears most of the economic damage caused by the pandemic, the economy will have returned to pre-crisis levels by the end of the year," the economist said.
"But the state budget will continue to be burdened," he said./DW
Source of information @TvKlan: Read more at: www.botasot.al
