The German economy stagnated at the end of last year, probably avoiding a double-dip recession that is engulfing the euro area.
The statistics office predicted that the country’s renewed pandemic lockdown won’t have the same severe impact as restrictions earlier in 2020. It estimates output remained flat in the fourth quarter, capping a year that saw an economic contraction of 5 per cent.
The government ran a budget deficit of 4.8 per cent of gross domestic product, the biggest since 1995.
Germany is the first advanced economy to publish 2020 GDP figures, and it’s likely to have fared better than its major European peers. Economists predict France and Italy both posted declines of about 9 per cent and U.K. gross domestic product may have shrunk more than 10 per cent.
The pain is extending into 2021 after a new surge in infections forced governments to extend lockdowns. Still, Germany has so far proved relatively resilient, in part due to extensive government support and its sizable manufacturing sector.
What Bloomberg Economics Says…
“A boost from manufacturing means Germany’s economy fared better in the fourth quarter than many anticipated and a contraction has probably been avoided. Set against that, we expect the new strain of COVID-19 sweeping across Europe to mean restrictions stay in place beyond January. That could prompt GDP to shrink as much as 3 per cent in 1Q.”
— Jamie Rush, Chief European Economist
“It will be decisive for economic developments what effects the second lockdown and tighter restrictions to fight the pandemic will have, as well as government support measures,” said Albert Braakmann, head of national accounts and prices at the statistics office.
The statistics office will publish official figures for the fourth quarter on Jan. 29.
Manufacturing has been a stronghold for Germany through the crisis as factories adapted more easily to health and safety restrictions than businesses that rely on face-to-face interactions. The sector makes up about a fifth of total output, and will likely help drive the recovery once global demand rebounds.
Restaurants, hotels and non-essential retailers will remain closed until at least the end of January. Chancellor Angela Merkel has sounded private warnings that another 10 weeks of lockdown might be necessary to curb a new variant of the coronavirus that risks driving up infections. A slow start to vaccination campaigns across the region is adding to uncertainty.
The Bundesbank remains optimistic though that Germany’s recovery will continue after an interruption in the winter half. With economic confidence picking up across the euro area, European Central Bank President Christine Lagarde also expressed confidence in a rebound for the currency bloc this year.
“We want the German economy to return to growth this year,” Economy Minister Peter Altmaier said at a news conference in Berlin after the GDP release. “Perhaps a bit less than originally hoped due to the new outbreak of the pandemic — but an upswing that can carry with it others in Europe and worldwide, and that can contribute to a positive development in the global economy.”
FREDERICTON – New Brunswick‘s finance minister says the province recorded a surplus of $500.8 million for the fiscal year that ended in March.
Ernie Steeves says the amount — more than 10 times higher than the province’s original $40.3-million budget projection for the 2023-24 fiscal year — was largely the result of a strong economy and population growth.
The report of a big surplus comes as the province prepares for an election campaign, which will officially start on Thursday and end with a vote on Oct. 21.
Steeves says growth of the surplus was fed by revenue from the Harmonized Sales Tax and federal money, especially for health-care funding.
Progressive Conservative Premier Blaine Higgs has promised to reduce the HST by two percentage points to 13 per cent if the party is elected to govern next month.
Meanwhile, the province’s net debt, according to the audited consolidated financial statements, has dropped from $12.3 billion in 2022-23 to $11.8 billion in the most recent fiscal year.
Liberal critic René Legacy says having a stronger balance sheet does not eliminate issues in health care, housing and education.
This report by The Canadian Press was first published Sept. 16, 2024.
OTTAWA – Finance Minister Chrystia Freeland says the government is making some changes to mortgage rules to help more Canadians to purchase their first home.
She says the changes will come into force in December and better reflect the housing market.
The price cap for insured mortgages will be boosted for the first time since 2012, moving to $1.5 million from $1 million, to allow more people to qualify for a mortgage with less than a 20 per cent down payment.
The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
On Aug. 1 eligibility for the 30-year amortization was changed to include first-time buyers purchasing a newly-built home.
Justice Minister Arif Virani is also releasing drafts for a bill of rights for renters as well as one for homebuyers, both of which the government promised five months ago.
Virani says the government intends to work with provinces to prevent practices like renovictions, where landowners evict tenants and make minimal renovations and then seek higher rents.
The government touts today’s announced measures as the “boldest mortgage reforms in decades,” and it comes after a year of criticism over high housing costs.
The Liberals have been slumping in the polls for months, including among younger adults who say not being able to afford a house is one of their key concerns.
This report by The Canadian Press was first published Sept. 16, 2024.
OTTAWA – Statistics Canada says manufacturing sales rose 1.4 per cent to $71 billion in July, helped by higher sales in the petroleum and coal and chemical product subsectors.
The increase followed a 1.7 per cent decrease in June.
The agency says sales in the petroleum and coal product subsector gained 6.7 per cent to total $8.6 billion in July as most refineries sold more, helped by higher prices and demand.
Chemical product sales rose 5.3 per cent to $5.6 billion in July, boosted by increased sales of pharmaceutical and medicine products.
Sales of wood products fell 4.8 per cent for the month to $2.9 billion, the lowest level since May 2023.
In constant dollar terms, overall manufacturing sales rose 0.9 per cent in July.
This report by The Canadian Press was first published Sept. 16, 2024.
