Germany's economy shrank 1.7% in the first quarter of 2021 as rising coronavirus infections forced shutdowns to be extended, worse figures than elsewhere in Europe, official data showed today.

"The coronavirus crisis caused another decline in economic performance at the beginning of 2021," the Destatis federal statistics agency said.

"This affected household consumption in particular, while exports of goods supported the economy," it added.

Analysts surveyed by Factset had expected a smaller contraction of 1.5%.

The weak start to the year in Europe's largest economy stands in stark contrast with the 0.5% expansion in gross domestic product (GDP) recorded in the fourth quarter of 2020, before more contagious virus variants upended Germany's bounce-back.

Germany's performance was also worse than the first-quarter data coming out of other large European economies today.

France announced a return to growth over the January to March period at 0.4%, while Italy suffered a contraction of 0.4% and Spain fell 0.5%.

Germany's woes come as the country remains gripped by a third coronavirus wave that has pummelled the services sector, with restaurants, hotels and leisure centres all feeling the pain from prolonged closures.

The picture is brighter in the crucial industrial sector, with Germany's export-oriented car manufacturers and machine makers among those benefitting from faster recoveries in key markets such as China.

Germany is also optimistic that vaccination progress and a gradual relaxation of restrictions will fuel a swift rebound from the middle of the second quarter.