GERMAN ECONOMY CONTRACTED AT A RECORD LEVEL OF 10.1%
According to leading data, the German economy contracted at a record level of 10.1% in the second quarter due to the decline in household expenditures, business investments and exports as a result of the COVID-19 outbreak. “The strongest decline has been experienced since the quarterly growth data began to be recorded in Germany in 1970,” said the German Federal Statistics Office. According to seasonally adjusted data, the German economy contracted by 11.7% in the April-June period compared to the same quarter of the previous year.
Analysts participating in the Reuters survey expected that the seasonally adjusted contraction would be 9% on a quarterly basis and 11.3% on an annual basis. Finance Minister Peter Altmaier, who announced the predictions for 2020 to the government, signaled the worst recession (stagnation) in the history of the Federal Germany.Survey indicators suggest that growth has recently begun, but high unemployment, which poses a threat to recovery, remains a risk.
The pace of recovery will partly depend on the effectiveness of the government’s 130 billion euro ($ 153 billion) incentive package, which was approved in June, and how quickly demand for German exports will rise to pre-pandemic levels. However, along with concerns about the acceleration of the virus outbreak, the economic outlook is uncertain despite the European Union (EU) bailout package led by Germany and France.