German economy posts sharpest contraction since the financial crisis

BERLIN, GERMANY – APRIL 23: German Chancellor Angela Merkel (CDU) sits at the Bundestag on April 23, 2020 in Berlin, Germany. Germany is still at the beginning of the coronavirus pandemic and will have to live with it for a long time, the Chancellor said.

Maja Hitij

German GDP (gross domestic product) shrank by 2.2% in the first quarter compared to the final three months of 2019, official preliminary statistics revealed Friday.

The contraction, fueled by the early stages of nationwide lockdowns implemented in March to curtail the coronavirus pandemic, was in line with analyst expectations. But it represents the sharpest decline since the first three months of 2009, in the throes of the global financial crisis.

On the year, Germany’s economy shrank by 2.3% from January to March compared to the same period in 2019, having posted a 0.4% annual rise in the fourth quarter.

The numbers are expected to get worse before they get better. The German Statistical Office has forecast a 10% plunge in GDP for the second quarter, dependent on the success of lifting lockdown measures.

Germany shuttered shops and factories in mid-March and began easing its lockdown restrictions in late April, having experienced a considerably lower death rate than other major European countries. However, significant portions of the economy remain shut.

According to the Robert Koch Institute for Disease Control, the transmission rate for the coronavirus remained below the key threshold of 1 in Germany following initial easing of lockdown measures. As of Friday morning, Germany has confirmed 174,478 cases and 7,884 deaths, according to Johns Hopkins University.

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Despite the steep downturn, Europe’s largest economy has fared better than France and Italy, which posted first-quarter contractions of 5.8% and 4.7% respectively.

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