The German economy shrank by a record 10.1% in the 2nd quarter as coronavirus lockdowns took their toll, official data showed on Thursday, July 30, but experts say a recovery is already underway.
The agency also revised its 1st quarter data, saying output declined 2% from January to March, slightly better than the previously announced 2.2%.Thursday's data"is nothing more than a look in the rearview mirror," ING bank economist Carsten Brzeski said, expecting"a strong rebound" in the 3rd quarter.
By contrast, the European Commission expects the economies of France, Italy, and Spain to shrink more than 10% this year.Germany has withstood the coronavirus shock better than many of its neighbors so far. Chancellor Angela Merkel's government, criticized in the past for sitting on fat budget surpluses, has gone to unprecedented lengths to cushion the economic impact of the crisis.
The VAT reduction helped drag German inflation into negative territory in July, Destatis said, with prices falling 0.1% year-on-year, the first negative showing since 2016. As an export powerhouse, Germany is highly vulnerable to virus setbacks in other countries that could lead to renewed shutdowns that once again disrupt supply chains and suppress demand.
Source: Financial Digest (financialdigest.net)
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