Germany’s economy suffered its sharpest economic downturn since records began in the second quarter of 2020 due to the coronavirus pandemic, the national statistics office said on Thursday.
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The country’s GDP fell 10.1 percent between April and June compared to the last quarter due to a sharp decline in consumer spending and business activity at the height of the pandemic, making it the largest decrease since records began in the European powerhouse in the 1970s.
Seasonally adjusted figures showed an 11.7 percent drop year on year. “It’s the recession of the century,†said Andreas Scheurle, an economist at Dekabank. What has so far been impossible to achieve with stock market crashes or oil price shocks was achieved by a 160 nanometer tiny creature named coronavirus.â€
Thomas Gitzel, chief economist at the VP Bank Group, said: “The good thing is, the numbers are a thing of the past. The economic engine is running again – albeit not smoothly. Since the economic downturn in the second quarter is now low, it doesn’t take much to record record growth rates in the third quarter. The pendulum then swings to the other side.â€
Economists are hoping Germany’s economy shows signs of a rebound in the third quarter.
The German Institute for Economic Research (DIW) has predicted a three percent rise in GDP between July and September given that many of the restrictions in place to contain the spread of coronavirus 19 have now been lifted.
The DIW said it would take two years for Germany to recover from the current recession.
Head of forecasting at the Kiel Institute for the World Economy Stefan Kooths said in a statement: “The crisis has not yet been overcome and Germany will feel the consequences of it for a long time.â€
Chancellor Angela Merkel’s coalition government in June announced a €130 billion ($152 billion) stimulus package in a bid to mitigate the effects of the coronavirus lockdown.
But the news of the drop in GDP comes as concerns rise in Germany over signs of a possible second wave of coronavirus.
As Germany released its second quarter economic figures, the European Union’s statistical office Eurostat confirmed that unemployment has climbed from 7.7 percent to 7.8 percent across the bloc in June, meaning an estimated 15 million working age men and women were out of a job. ■