Germany's third-quarter Gross Domestic Product (GDP) grew by 1.7 percent quarter-on-quarter, driven by household spending and vaccinations, along with the reopening of restaurants and shops over the summer, which provided the public with the opportunity and confidence to head back out and spend.

However, the colder weather has brought about a colder outlook for the country's fourth quarter as new COVID-19 restrictions are implemented amid stagnant vaccination levels.

Clemens Fuest, the president of the IFO Institute in Munich, said COVID-19 has interrupted the economic recovery.

"First of all, we had the delivery problems in the summer and now we have the outbreaks of infections. I won't talk about a relapse into recession yet, but we are now in a kind of stagnation," he noted.

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With temperatures dropping, people are again heading back indoors, which is leading to a substantial increase in COVID-19 infections.

On Thursday, Germany passed the sobering threshold of 100,000 COVID-19 deaths and reached 75,961 new infections, another daily record.

The country's incoming three-party government has a real challenge on its hands to revive Europe's biggest economy and the first step will be to set up a team of experts to assess the daily COVID-19 situation in order to enact the most relevant measures.

Fuest expects the new government to actively start managing the pandemic to reignite the economy.

"We have the impression that politicians are very passive and we are paying a high price for this. Something has to happen. And at the same time we expect the coalition to present a plan for medium-term economic development."

Minimum wage promise from coalition

Incoming Chancellor Olaf Scholz said the coalition was also speaking of possible mandatory vaccinations for those working with vulnerable people such as in elderly care facilities, and announced 1 billion euros' worth ($1.13bn) of bonuses for healthcare workers.

In an effort to stimulate the economy long term, the next government intends to invest heavily in green alternatives in order to meet 80 percent of the country's energy demands with renewables by 2030. It also intends to put 15 million electric cars on German roads.

It has also promised to raise the minimum wage to 12 euros per hour ($13.50), which would help roughly 10 million people and stabilize pensions to provide more security to the elderly.

The new governing coalition also plans to legalize the controlled sale of cannabis for recreational use, which could add $2.8bn in additional revenues a year, according to the German Economic Institute in Cologne.

Beyond that, new Finance Minister Christmas Lindner, from the debt-averse Free Democrats, is likely to present obstacles to further spending, eventually wanting to bring down taxes, too.

Good news for many Germans, but then the question arises – where will the money come from for the country's ambitious green transition?

Year-on-year, GDP for Germany is expected to grow by 2.5 percent in 2021, slightly down from the German government's prediction of 2.6 percent, and by 5.1 percent next year, led by a "catch-up" from low production levels of goods and services in 2021.