German Economics Ministry Expects Recovery of German Economy Will Take Some Time
By Maria Martinez
The German economy should grow strongly in the third quarter but
the recovery from the historic decline in economic output in the
first half of the year will take some time, the Federal Ministry of
Economic Affairs said.
"With the gradual easing of the restrictions, the German
recovery process restarted in May," the ministry said in the latest
monthly report. The further economic upturn depends to a large
extent on the course of the coronavirus pandemic at home and
abroad, the ministry said.
"Some of our trading partners' economies are still heavily
impacted by the pandemic," the ministry said. "For this reason,
after the first initial rebound in May and June, the recovery
process of the German economy will only progress slowly and it will
take a long time."
The German gross domestic product in the second quarter
contracted 10.1% quarter-on-quarter. But the ministry sees with
optimism that German companies are now "noticeably more confident."
For the global economy, real-time indicators also point to a
recovery in the course of the year.
The pandemic will remain a major factor of uncertainty. The most
affected areas such as the U.S., South Africa and parts of Latin
America are a cause of concern, the ministry said. There is also an
increasing number of cases in the U.K., Russia, India and
"This shows that the foreign trade environment for the German
economy is likely to remain difficult for some time to come," the
For now, however, the leading indicators for German exports
point to a further recovery ahead, such as Ifo's export
expectations for the manufacturing sector.
The recovery of production in the manufacturing sector continued
strongly in June and manufacturing orders also indicated a
significant rebound in industrial activity. However, given
persistently weak foreign demand and the uncertainties of the
course of the pandemic, the catching-up process in the
manufacturing sector will take some time, the Ministry of Economic
The ministry sees signs of stabilization in retail trade and in
the labour market. Consumption has been rising significantly since
May, as stores reopened. The 87.5% increase in new car
registrations in July also shows the recovery process is likely to
continue in the near future, the report said.
In the labor market, the ministry sees stabilization as a result
of the widespread use of short-time work schemes and the revival of
business activity. However, the demand for labour remains subdued.
According to the ministry's assessment, companies are counting on a
return to pre-crisis working hours before hiring new staff. But
leading indicators indicate the stabilization of the labor market
is likely to continue.
Write to Maria Martinez at firstname.lastname@example.org
(END) Dow Jones Newswires
August 14, 2020 06:01 ET (10:01 GMT)
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