Coronavirus: Germany in turn enters recession

Text by: RFI Follow

Germany is seeing its economy slow down because of the coronavirus, but it is doing better than its partners in the euro zone. 

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Germany, the largest European economy, suffered a 2.2% decline in its gross domestic product in the first quarter, officially entering a recession, according to the balance sheet released this Friday, May 15 by Destatis, the federal office of statistics. However, Germany is doing better than the rest of the euro zone, where the impact of the coronavirus is more brutal, with a fall in GDP of 3.8% in the first quarter according to Eurostat, the European Institute for the statistics.

Towards a 10% contraction in GDP over one year

But for the Germans, it was a real shock. They have not experienced such a drop in their GDP since the global financial crisis of 2008. It is also the second worst result since the reunification of the country in 1990. "  Now we officially know what such containment costs: around 1 to 2% per week,  ”analyzes Jens-Oliver Niklash, economist at LBBW and quoted by AFP.

And this is probably just the start. The crisis should affect the German economy much more violently in the second quarter. For the period between April and June, analysts predict a contraction of GDP by 10% over a year. Over the whole of 2020, the government, for its part, expects a recession of around 6.3%.

► Read also: Coronavirus: the underside of the “German model”

The sectors most affected are tourism, the automobile (97% of cars produced less in April over a year), air transport and even industry. German exports are at a standstill. The airline Lufthansa is losing a million euros per hour due to the fall in air traffic, when the world number 1 in tourism TUI, is about to cut 8,000 jobs.

Pending a hoped-for rebound as early as 2021 and a faster recovery than elsewhere in Europe, Berlin has abandoned its usual budgetary rigor and announced, to deal with the crisis, a colossal loan and direct aid plan for businesses, to 1.1 trillion euros .

(With AFP)

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• Germany
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