German Q3 GDP Rebounds At Faster Than Expected Rate

Following the relaxation of Covid-19 restrictions, the German economy rebounded at a faster than expected pace in the third quarter, offsetting a large part of the massive contraction in the second quarter, revised data from Destatis revealed on Tuesday.

Gross domestic product grew 8.5 percent sequentially in the third quarter, reversing the 9.8 percent decline in the second quarter caused by the coronavirus pandemic.

The third quarter GDP rate was revised up from 8.2 percent estimated on October 30.

While the slump in the second quarter was less severe than in most other eurozone countries, the rebound in the third quarter was also less pronounced, Carsten Brzeski, an ING economist said.

With an extension and tightening of the second lockdown looming, a double-dip is in the making, the economist added.

On a yearly basis, calendar-adjusted GDP was 4 percent lower than in the same period last year, but slower than the 11.3 percent contraction posted in the second quarter.

The statistical office revised the third quarter GDP from -4.3 percent.

Price-adjusted GDP dropped 3.9 percent versus -11.3 percent in the second quarter and -4.1 percent fall initially estimated for the third quarter.

The expenditure-side breakdown of GDP showed that household spending, investment and exports underpinned the robust recovery.

Household spending advanced 10.8 percent from the previous quarter, reversing an 11.1 percent fall in the second quarter. Meanwhile, government spending growth slowed to 0.8 percent from 2.2 percent.

Gross fixed capital formation gained 3.6 percent, in contrast to a 6.6 percent decrease in the prior quarter.

Exports surged 18.1 percent after declining 20.5 percent in the preceding period. At the same time, imports were up 9.1 percent, following a 15.9 percent drop in the prior quarter.