That represented an upwards revision of the Federal Statistics office’s (Destatis) previous estimate of just 0.1-per-cent growth for the last three months of 2020.
That period saw the return of Germany’s second lockdown, which began in November with the closure of restaurants, bars and other establishments, and was tightened further the following month as schools, retailers and other parts of public life followed suit.
Following a historic slump of 9.7 per cent in the second quarter, Europe’s biggest economy has been on the mend. But – after rebounding by 8.5 per cent in the third quarter, after Germany eased out of its first lockdown – growth slowed down markedly at the end of 2020.
During the whole year, the German economy contracted by 4.9 per cent, a slight improvement on Destatis’ first estimate of 5 per cent.
The agency also had better news when it came to Germany’s spending deficit, although the pandemic still cut deep into state coffers.
The government’s net borrowing last year amounted to 139.6 billion euros (169.7 billion dollars), rather than a previously estimated 158.2 billion euros, Destatis said.
Measured as a percentage of gross domestic product at current prices, the deficit ratio was 4.2 per cent.
That was the country’s first financial deficit since 2011 and the second-highest since German reunification, after the record year of 1995, when debt from the Treuhand agency for reprivatizing East German enterprises was integrated into the general government budget.
In a normal year, the deficit could have got Germany into hot water under EU spending rules, but those were suspended due to the pandemic.
Member states are usually expected to limit their budget deficit to 3 per cent of GDP and 60 per cent for public debt.
In 2020, Germany dropped its reputation as a fiscally conservative nation and launched multibillion-euro aid programmes to support the economy through the crisis.
Meanwhile, fiscal revenues dropped, not least because the rate of value-added tax was reduced for a six-month period in a bid to encourage consumer spending.