- "It is the worst decline for the index since the start of the quarterly accounts of gross domestic product in Germany in 1970."
- Germany witnessed a historical decline of 10.1 percent in its gross domestic product.
- The rate of decline over a year swallowed 11.7 percent, with corrected inflation figures.
The German Statistical Office announced that the economic performance fell sharply in the second quarter of this year due to the Coronavirus pandemic. The number of unemployed in the country increased during the month of July, to 2.91 million people, in which is normally a low employment time of the year.
In the second quarter of 2020, Germany witnessed a historical decline of 10.1 percent in its gross domestic product as a result of the restrictions imposed due to the outbreak of the new Coronavirus, as announced on Thursday by the Federal Statistical Office (Destatis).
“It is the worst decline for the index since the start of the quarterly accounts of gross domestic product in Germany in 1970,” the office said in a statement, far more than the previous record drop of 4.7 percent in the second quarter of 2009 at the height of the financial crisis. The rate of decline over a year swallowed 11.7 percent, with corrected inflation figures.
“In the second quarter of 2020, exports and imports of goods and services witnessed a significant decrease,” said Destatis. The German economy faced multiple shocks, as isolation measures from mid-March to May during the health crisis crippled production in many sectors, slowed trade, and cut consumption.
In April, at the height of the restrictions, the production of the manufacturing sector, the mainstay of the eurozone’s largest economy, dropped by a historic 17.9 percent. Industry orders fell 25.8 percent, while exports sunk 31.1 percent.
Germany fared better than its neighbors in the health crisis, and has lifted most of the restrictions it imposed since May which has allowing for some economic recovery. “We should now expect compensation for the rest of the year” at a pace linked to the health situation, said Jens Oliver Nilclash, an economist at the BBB Bank.
The German government expects growth to resume from October, a 5.2 percent increase from 2021, and production to return to pre-crisis levels in 2022. In a sign of some stability, the unemployment rate remained the same in July compared to June, which is 6.4 percent after three months of an increase due to the economic crisis.
The national job agency reported that the number of unemployed fell by 18,000 over a month, according to the seasonally corrected figures published Thursday, while the number of partially unemployed reached a record number in May.
In a related context, the Federal Agency for Labor announced today that the number of unemployed in Germany rose during the month of July and reached 2.91 million people. The agency indicated that this number exceeds last June record, with a total of 57,000 people, and more than what has registered a year ago with a total of 635,000 people. The agency added that the unemployment rate rose in July by 0.1 percentage points, to 6.3 percent.
It is noteworthy that the number of unemployed increases regularly in Germany during the month of July of each year. The agency explained that this increase should not be traced back to the Coronavirus crisis. It is worth noting that the number of companies that employ new people before the summer holidays usually decreases in July of each year, and the period of vocational training often ends at this time.
“The job market is still under pressure due to the Coronavirus epidemic, even if the German economy is in the direction of recovery. The large volume of employment with short working hours has prevented stronger increases in unemployment and job losses,” said Dettel Scheele, head of the Federal Employment Agency.
Earlier today, the Federal Agency for Employment in Germany also announced that the number of people working with the short working hours system in Germany had increased in May reaching 6.7 million. The agency pointed out that the number of people, working shorter hours, was 6.1 million last April, noting that in May it reached the highest level ever recorded in Germany.