Germany’s Bundesbank said that economic output is likely to “decline sharply” in Q1, in particular in contact-intensive service sectors. In addition to the pandemic containment measures, the higher VAT rates since the beginning of the year also played a role in the contraction.
Nevertheless, industry benefited from “dynamic foreign demand”. Incoming orders “significantly exceeded” pre-crisis level of Q4 2019. Good exports continued to grow, with “sharp rise in exports to other countries” more than enough to compensate the loss of exports to UK.
Bundesbank also noted the “significant increase” in consumer price”. One reason is rise in energy prices. Others include some food prices.
