German economic output down sharply owing to coronavirus
According to preliminary calculations by the German Federal Statistical Office (Destatis), German economic output fell by 2.2% on the quarter in the first quarter of 2020. “
This was the largest decline since the global financial and economic crisis in 2008/09 and the second-largest decline since German unification,” the experts in Berlin said. Only in the first quarter of 2009 was the decline even stronger, at 4.7%.
According to the statisticians, the German economy also collapsed compared with the previous year. They reported a 1.9% drop in gross domestic product (GDP) on the year in the first quarter of 2020.
Construction investment and government consumption preventing more severe decline
According to Destatis, private consumption and investment, such as in plant, property and equipment (PPE) and vehicles, have declined markedly. Industrial output fell sharply in almost all sectors in March 2020. “
The automotive industry was hit hardest, with output falling by nearly one-third compared with February 2020,” the experts said. Retail sales were also down sharply in March, despite going up in the food retail sector, pharmacies and drugstores.
Overall, both exports and imports fell sharply in the first quarter compared with the fourth quarter of 2019. Only government consumption expenditure and investment in buildings prevented an even more severe decline. Compared with other large euro area countries, however, the decline in German GDP was moderate. According to initial estimates, GDP fell by 5.8% in France, the second-largest economy in the euro area, and by 4.7% in Italy. In the euro area as a whole, economic output contracted by 3.8% in the first quarter.
Hardly any change in employment up until end-March
According to Destatis, employment in Germany barely changed in the first quarter of 2020. 45 million people were registered as being in employment, 147,000 (0.3%) more than a year ago. So far, the measures to contain the pandemic are having only a moderate impact on the number of persons in employment, partly because people in short-time work are still being counted as employed, according to the experts. The latest figures from the Federal Employment Agency show that, up to the end of April, 751,000 notifications of short-time work had been filed for a total of up to 10.1 million employees. According to the Federal Statistical Office, the macroeconomic impact in the second quarter is likely to be much more pronounced if short-time work continues.