Berlin (AFP)

The German government lowered its forecast for 2021 gross domestic product (GDP) growth to 3% on Wednesday, from 4.4% previously expected, due to the persistence of the Covid-19 pandemic.

"The recovery continues in 2021, but with less force," said Economy Minister Peter Altmaier in a report released Wednesday.

According to Berlin, the German economy should return to its pre-crisis level only from "mid-2022".

The reason for this revision is the still significant impact of the Covid-19 pandemic on the German economy, which experienced a 5% recession in 2020.

"It is expected that economic activity will still be strongly marked by the pandemic", especially "at the start of the year," says the government.

Like all European countries, Germany has been hit hard since the fall by the second wave of the new coronavirus which has resulted in the restrictions being extended beyond the expected duration.

Non-essential shops have been closed since mid-December, while restaurants, bars, cafes, and places of leisure and culture have been closed since November.

These measures have significantly slowed the economic recovery that began this summer after the first wave, and they cloud the outlook.

So far, the good performance of the industry, driven by the dynamism of the Chinese market, has helped limit the damage, with GDP expected to stagnate for the fourth quarter of 2020.

But the fall in activity in services and commerce, caused by the restrictions, could seriously affect overall activity during the first part of the year.

According to the economic institute DIW, Germany is expected to experience a 3% drop in its GDP in the first quarter of 2021.

For the government, the vaccine campaign could however gradually make it possible to "lift the restrictions".

"A lot of sectors are expected to recover very quickly from the restrictions," said Peter Altmaier.

Germany last week extended its measures against the pandemic until mid-February.

© 2021 AFP