Germany's Economy Shrank in 1Q and Entered Recession, Confirming First Estimate
May 25 2020 - 2:48AM
Dow Jones News
By Maria Martinez
The German economy posted its largest decline in output since
the financial crisis in the first quarter and entered a recession
due to the coronavirus pandemic and the lockdown implemented in
mid-March, the German statistics office Destatis said Monday,
confirming a preliminary estimate.
As previously reported, gross domestic product--the broadest
measure of goods and services produced in an economy--contracted
2.2% in the first quarter compared with the previous quarter. GDP
fell 2.3% on year in the first quarter on a calendar and
price-adjusted basis, Destatis said, confirming the first
estimate.
This is the second largest decrease since German unification,
following a 4.7% decline in the first quarter of 2009, Destatis
said.
Household final consumption decreased an adjusted 3.2% and fixed
capital formation in machinery and equipment declined 6.9%.
Government expenditure rose 0.2% and fixed capital formation in
construction increased 4.1%, preventing an even larger GDP
decrease.
Foreign trade also declined due to the coronavirus. According to
provisional calculations, exports were down 3.1%, after price,
seasonal and calendar adjustment. While exports of goods decreased
4.0%, exports of services increased 0.7%. Imports of goods and
services were down 1.6%.
The lockdown started in Germany on March 22 and was less
stringent than in other eurozone countries. Economists expect to
see a sharper GDP contraction in the second quarter. With the
German economy starting its gradual reopening on April 20, a larger
chunk of second-quarter output will be lost than in the first
quarter.
Roughly 45 million people were in employment in the first
quarter, an increase of 147,000 people or 0.3% on year. Such a
small year-on-year increase had last been observed in the second
quarter of 2010, Destatis said.
One of the reasons why the pandemic had only a moderate impact
on the number of persons in employment in the first quarter is that
short-time workers are counted as persons in employment, Destatis
said.
Northern European countries, by and large, shrank far less than
its Mediterranean counterparts. The Dutch economy contracted 1.7%
in the first quarter, while the Italian economy declined 4.7%
during the first quarter, France posted a historic contraction of
5.8% and the Spanish economy plunged a record 5.2%, according to
preliminary estimates.
Write to Maria Martinez at maria.martinez@wsj.com
(END) Dow Jones Newswires
May 25, 2020 02:33 ET (06:33 GMT)
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