Home Business News Germany’s economy enters into a ‘technical recession’

Germany’s economy enters into a ‘technical recession’

by LLB Politics Reporter
15th May 20 3:45 pm

Germany has seen their economy shrink by 2.2% in the first quarter compared to the previous three months period due to the country being under lockdown.

This means the largest economy in Europe went into recession after a dip at the end of last year. The Federal Statistical Office revealed figures that shows the damage caused by the pandemic.

The government are trying to limit this with rescue programmes which has pushed the French and Italian economies into recession.

Germany saw their biggest quarterly decline between January and March, since it was reunited in 1990, which exceeded by just a 4.7% fall in the first quarter of 2009, which was the hight of the global financial crisis.

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.

As a result of the two-consecutive quarter of economic contraction, this revised figure therefore defines that Germany entered into a technical recession. In year on year terms this shows the German economy took a 2.3% hit.

Recent data shows that there was a decrease in factory orders in March by 15.6% month-on-month, with a 9.2% fall in industrial production.

Exports saw the strongest decline since Germany reunited in 1990, by 11.8%. The country are expecting a far worse economic performance in the second quarter, as it “will start to freeze” in May, said Allianz economist Katharina Utermoehl in a research note.

“In the short term, some catch-up effects can be expected, but the economy’s underlying growth momentum is likely to pick up only gradually in the coming months.”

She added that the German economy looks set to emerge faster and be in a much stronger position than their neighbours, with a 8.9% decline in full-year GDP in 2020.

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