Germany posts worst contraction since global crisis
15 May 2020 01:59 PM
Initial data published today shows that the German economy fell into recession after experiencing the worst quarterly contraction since the 2009 financial crisis, as shops and factories closed in mid-March to combat the spread of the coronavirus.
The first quarter contraction of 2.2% is a foretaste of the worst to come. Currently, economists expect a deeper recession in the second quarter as the shutdown extended well into April and early May while sectors such as tourism remain closed.
However, Germany appears to be better off than neighboring France and Italy, as their economies contracted by 5.8% and 4.7% respectively in the first quarter.
This is partly due to a decision by 16 German states to allow factories and construction sites to remain open and an unprecedented rescue package by Chancellor Angela Merkel's government which included state assistance to allow employers to switch employees to shorter working hours to avoid mass layoffs.
According to the data, output for the fourth quarter was revised to a contraction of 0.1% from a previously reported stagnation, which means that Germany is technically experiencing a recession after two consecutive declines in production.
Seasonally adjusted figures from the Federal Statistics Office shows that gross domestic product in Europe's largest economy fell 2.3% during the January-March period year-on-year, compared to the previous quarter which recorded growth of 0.4%.