The German economy suffers the biggest decline on record

According to new official figures, the German economy contracted at its fastest recorded rate amid the impact of the coronavirus pandemic.

Total production of goods and services decreased by 10.1% during the period from April to June.

It was the biggest decline since Germany started producing quarterly growth figures in 1970.

The contraction followed a smaller but still severe fall in activity of 2% in the last three months.

The German economy, in common with most others, has been greatly affected by the pandemic and the restrictions that have been imposed in an effort to contain it.

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The country’s statistical office said there was a “massive drop” in household spending, investment in equipment and machinery, and in exports and imports.

Germany is a leading exporter, especially of manufactured products, so it has inevitably been greatly affected by the disruption in international trade caused by the health crisis.

Bounce expected

The only area where the statistics office said there was some growth was government consumption spending, which means spending unrelated to public sector investment.

There have been signs in other data that a recovery may have started after April. That’s suggested by monthly figures for industrial production and retail sales, for example.

Andrew Kenningham of Capital Economics says he expects a rebound in GDP in the current third quarter of the year. But it expects it to remain below pre-crisis levels for a long time.

The new figures confirm that Germany has been in recession as the term is often defined: two consecutive quarters of declining GDP.

The recession was previously believed to have started in the last quarter of 2019, with a slight decrease from the previous three months.

But the statistics office has revised the figures for that period to no change (at least when rounded to a decimal). So now it looks like the recession started in the first quarter of this year.