Spotlight: German GDP down 2.2 pct with record decline in Q1

Source: Xinhua| 2020-05-15 19:57:09|Editor: huaxia

BERLIN, May 15 (Xinhua) -- The gross domestic product (GDP) in Germany was down seasonal and calendar adjusted by 2.2 percent in the first quarter (Q1) of 2020 compared to the previous quarter, the Federal Statistical Office (Destatis) said on Friday.

It was the "largest decrease since the global financial and economic crisis" of 2008/2009 and the second largest quarterly drop since German reunification in 1990, Destatis noted.

"The decline is mainly driven by the shutdown of parts of the economy in order to mitigate the spread of the coronavirus," Oliver Holtemoeller, vice president of the Halle Institute for Economic Research (IWH) and head of the department of macroeconomics at IWH, told Xinhua on Friday.

According to Destatis, household consumption expenditure, as well as gross fixed capital formation in machinery and equipment, also fell sharply in Q1.

However, government consumption expenditure and gross fixed capital formation of Germany's construction industry had a "stabilizing effect and prevented a larger GDP decrease," Destatis noted.

The drop in German GDP was "not unexpected," according to the Kiel Institute for the World Economy (IfW Kiel). The slump mainly occured in the second half of March, which suggested a "drastic double-digit decline in this period," Stefan Kooths, head of forecasting at IfW Kiel, told Xinhua on Friday.

For the second quarter, IfW Kiel expected the "largest quarterly decline" in GDP in the history of Germany, with more than 10 percent, despite an upturn in economic activity from May onwards.

"However, the return to pre-crisis levels will not take place in a sprint, but rather resembles a medium-distance run that will only reach its goal in the course of next year," warned Kooths.

"The coronavirus pandemic has plunged the global economy into recession," Germany's Ministry for Economic Affairs noted on Friday. Because of the national shutdown, German economic output had already fallen noticeably in Q1 and this development would initially intensify in the second quarter.

The recession was likely to reach its lowest point in April, with the collective stopping of production in the automotive industry, according to Ministry for Economic Affairs and Energy. With the cautious gradual easing of the shutdown at the beginning of May, economic recovery was beginning. Enditem