BERLIN/PARIS- The German economy contracted over the last three months of 2021 while the French economy expanded, data published on Friday showed, pointing to contrasting fortunes for the euro zone’s two largest economies during the pandemic.
Germany is often referred to as the European Union’s economic engine, but restrictions introduced in the autumn to fight a fourth COVID-19 wave as well as supply chain disruptions translated into a contraction of 0.7 percent in the fourth quarter.
The French economy, which saw an economic revival toward midyear as restrictions were largely lifted, kept growing in the same period, posting a 0.7 percent rise. This translated into a full-year expansion of 7 percent, the strongest since 1969.
The German economy expanded by 2.8 percent last year, exposing its vulnerability to supply chain bottlenecks hampering the manufacturing sector that forms its export-oriented backbone.
“The German economy went into hibernation at the turn of the year,” Carsten Brzeski of ING wrote in a note.
“New restrictions to tackle the fourth wave of the pandemic and the Omicron wave as well as higher energy prices dented private consumption. With this weak fourth quarter, the likelihood of Germany being in an outright recession at the turn of the year has increased.”
