The German economy contracted at the fastest pace since the global financial crisis in 2008-09 in the first quarter, as the nationwide lockdown to contain the coronavirus spread weighed on consumption and overseas demand, pushing the economy into a recession.
Gross domestic product fell 2.2 percent sequentially, which was the biggest fall since the first quarter of 2009, preliminary data from Destatis revealed Friday.
This was also the second largest decrease since German unification. The GDP rate came in line with economists’ expectations.
The stagnation in the fourth quarter was revised to reveal a 0.1 percent contraction.
Two consecutive quarters of contraction indicates that the largest euro area economy entered a technical recession.
The statistical office forecast 10 percent economic contraction in the second quarter.
On a yearly basis, GDP declined by calendar-adjusted 2.3 percent in the first quarter versus a 0.4 percent rise in the fourth quarter. Detailed GDP data is due on May 25.
Price-adjusted GDP dropped 1.9 percent annually, in contrast to an expansion of 0.2 percent seen in the fourth quarter. Economists had forecast a 1.6 percent fall.
Household final consumption expenditure fell sharply and gross fixed capital formation in machinery and equipment decreased considerably from previous quarter.
However, final consumption expenditure of general government and gross fixed capital formation in construction had a stabilizing effect and prevented a larger GDP decrease.
Meanwhile, both exports and imports logged a strong decline on the fourth quarter.
Although the economy logged a notable contraction, Germany fared much better than France and Italy, where GDP declined 5.8 percent and 4.7 percent, respectively, in the first quarter.
Further, data showed that German employment increased by 147,000, or 0.3 percent in the first quarter from the last year. However, such a small annual increase was last reported in the second quarter of 2010.
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