The Federal Statistical Office of Germany, otherwise known as Destatis recently released Germany’s GPD figures for the second quarter of 2020. According to the data, the country’s GDP dropped by a whopping 9.7% after adjusting for price compared to the country’s Q1 2020 GDP figure. It was also a -11.3% decline compared to the country’s GDP in Q2 20219.
To put GDP decline to perspective, the Q2 GDP decline in 2020 was bigger than the -4.7% GDP decline that Germany experienced in Q1 2009 during the massive financial and economic crisis that took place back then. The latest GDP decline is also the sharpest that the country has experienced ever since it started calculating its GDP in the 1970s.
Domestic and foreign demand performance
According to the latest statistics, the local demand for equipment and machinery contracted by 27.9% which is a higher decline than the 9.5% decline reported in Q1 2020. There was a 13.0% decline in household final consumption expenditure in Germany year-on-year. Fortunately, the government’s 3.8% increase in final consumption expenditure provided the buffer that the economy needed to avoid collapse.
As far as foreign demand is concerned, there was a 22.2% decline in the export of German goods and services in Q2 2020. In comparison, the export of goods and services tanked by 20.3% in Q1 2020. Imports fell by 17.3% during the 3 months.
Germany’s manufacturing industry experienced a 20.8% decline in gross value in Q2 2020, while the business services segment’s gross value fell by 16.0% during the same period. The only German segment that experienced a positive gross value during the second quarter was the construction industry whose price-adjusted gross value rallied by 1.6%.
Employment performance
Roughly 44.7 million people in Germany were employed by the end of Q2 this year, which is 574,000 people less than the country’s registered work-force by the end of Q2 2019. The employment decline in Q2 this year is the sharpest that the country has ever recorded since its reunification.
Summary
The above data highlights the massive negative economic impact of the coronavirus on Germany’s economy. The lockdown measures caused the shutdown of many industries and the fall in demand, especially for non-essential products.