Economic IndicatorsTop News

Slump in consumption, exports push Germany into recession in first quarter

imageEconomy8 hours ago (May 25, 2020 02:50AM ET)

(C) Reuters. FILE PHOTO: Containers are seen at a terminal in the port of Hamburg

BERLIN (Reuters) – A slump in capital investments, private consumption and exports pushed the German economy into a recession in the first quarter, detailed data showed on Monday, giving a glimpse of the damage caused by the coronavirus pandemic.

The Federal Statistics Office said capital investments fell by 6.9%, private consumption by 3.2% and exports by 3.1% between January and March compared with the last three months of 2019.

This meant that private consumption took off 1.7 percentage points of overall economic activity and net trade shaved off 0.8 percentage points, translating into a first-quarter contraction of 2.2%, the steepest rate since 2009.

The data showed that investments in the construction sector, which accounts for almost 10% of overall national output and is Germany’s largest employer, rose by 4.1%, contributing 0.4 percentage points to quarterly growth.

State spending was the other bright spot in the otherwise grim data and together with construction it prevented a deeper contraction. Government expenditure rose by 0.2% on the quarter, the data showed.

The 2.2% drop in quarter-on-quarter output was the widest since the financial crisis of a decade ago and the second biggest since German reunification in 1990. It followed a 0.1% contraction in the last three month of 2019.

Economists expect a bigger fall in output in the second quarter as the bulk of curbs introduced in mid-March to fight the outbreak become more apparent.

“As the first quarter performance is the result of ‘only’ two weeks of lockdown and supply chain disruptions due to lockdown measures in Asia, it does not need much analytical skill to predict a much stronger slump in the second quarter,” said Carsten Brzeski, chief euro zone economist at ING.

“Three more weeks of lockdown and a very gradual lifting of some measures do not bode well for the second quarter.”

Slump in consumption, exports push Germany into recession in first quarter

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Related Articles

Back to top button
Get the daily email that makes reading the news actually enjoyable. Stay informed and entertained, for free.
Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!