Economy

The German economy experienced the strongest decline since 2009 due to coronavirus

The German economy experienced the strongest decline since 2009 due to coronavirus”

That means German GDP growth has been negative for two successive quarters, the technical definition of a recession.

The agency said that was the largest year-on-year quarterly drop since the 2008-2009 financial crisis.

Economy Minister Peter Altmaier last month warned that Germany was headed for "the worst recession" in its post-war history as the pandemic brought huge swathes of the economy to a standstill.

According to Albert Braakmann, the senior statistics officer, this followed a 0.3% gain in last year's third quarter, which saw a 0.1% contraction during the fourth quarter, which was later revised down to zero in February's growth.

The German economy plunged into recession as the country's federal statistics authority released grim data showing a contraction of 2.2% on Friday.

"The timing of the lifting of the lockdown measures as well as the huge fiscal support by the German government. support the view that the German economy could leave the crisis earlier and stronger than most other countries", Brzeski said.

March was the month in which the coronavirus pandemic hit Europe, with first Italy and then other countries imposing sweeping restrictions on public life and businesses.

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Like nearly all European Union states, Germany did not go into lockdown to slow the spread of the virus until around mid-March, so the bulk of the impact of those curbs will only become apparent in second-quarter data as sectors like tourism, and bars and restaurants, remain shut.

Recent data showed a 15.6 percent month-on-month decrease in factory orders in March, and a 9.2 percent drop in industrial production.

A far worse economic performance is expected in the year's second quarter, April through June. Shops have now reopened; restaurants are gradually opening up and auto production has also restarted.

With millions of people in a government-backed short-time work program and unemployment rising, consumers are likely to refrain from making major purchases. she said.

The day before, a study published by consulting firm Ernst & Young showed that operating profit (EBIT) of Germany's large companies shrank by 23.5 percent to a total of around 20.3 billion euros (21.9 billion US dollars) in 2020 Q1, compared to the same quarter past year.

Utermoehl said that the German economy looks set to emerge faster and in a stronger position than most of its neighbors, with an 8.9 percent decline in full-year gross domestic product in 2020 that would be less severe than those of France or Italy.

The 2.2% first-quarter contraction was a foretaste of worse to come.



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