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According to economists, the crown crisis had a massive impact on the German economy in the first quarter. Exit restrictions, closed borders and stores have paralyzed business in mid-March. On Friday, the Federal Statistical Office announced how much gross domestic product (GDP) contracted in the first quarter compared to the previous quarter using preliminary data. Economists expect a decrease of between 1.8 and 2.5 percent.
According to initial data from the European Statistical Office Eurostat, economic output in the euro area fell 3.8 percent in the first quarter. It was the steepest decline in the common monetary area since the 1995 surveys began.
According to economists, the bottom has not yet been reached. The decline in the second quarter, when the crown measures had a stronger impact, is likely to be more severe. “The lowest point of the crisis is likely to be behind us in April now, but the increase will only take place gradually and there can be no question of normality for a long time,” said Stefan Kooths, chief economic officer of the Institute for Economics. World. Deutsche Bank economists anticipate a 14 percent drop in gross domestic product in the second quarter compared to the previous quarter. Economists at development bank KfW predicted that Europe’s largest economy “is a long way from the Corona Valley.”
The federal government anticipates the worst recession in postwar history for the entire year. Gross domestic product is expected to decline 6.3 percent in 2020, even if it recovered in the second half of the year. In the 2009 global financial and economic crisis, gross domestic product fell 5.7 percent. The global crown crisis with broken supply chains is weighing on German exports, but also private consumption.
Fear of job loss and short-term work depresses the mood of consumers. According to GfK, a Nuremberg market researcher, the consumer climate has recently fallen to a record low. The crown pandemic could affect people’s buying mood for a long time: According to a GfK survey, one in three believes that their financial situation will deteriorate in the next twelve months.
In the past, the buying mood of consumers in particular had kept Europe’s largest economy. Foreign trade had already slowed in 2019, burdened by international trade conflicts and the slowdown in the world economy.
