Germany plunges into recession with biggest slump in decade
The German economy shrank 2.2 per cent in the first quarter, the most in more than a decade, offering an early flavor of the damage from the coronavirus outbreak.
A revision to the fourth quarter to show a 0.1 percent contraction means Europe’s largest economy is already in a recession. With restrictions to contain the pandemic only slowly being lifted, the economy is set to suffer much more in the three months through June.
The German government has already mobilized some 1.2 trillion euros (US$1.3 trillion) to support German businesses and is working on additional tools to kickstart the economy. More than 370,000 people lost their jobs in April alone, and a program where the state compensates large parts of wages lost when businesses cut workers’ hours has received applications for more than 10 million staff.
Even though the situation is dire, Germany isn’t faring as poorly as much of the rest of the euro area. France, Italy, and Spain have all registered first-quarter contractions of around 5%. The Dutch economy shrank 1.7 percent, according to a separate report.
Projections for Germany -- as well as the euro area -- are highly uncertain and largely depend on how the outbreak develops. The region’s largest economy is on track for its worst recession since World War II, with the European Commission predicting a decline in output of 6.5% this year.