Germany Sees Biggest Ever Contraction In GDP Due To COVID-19

On Thursday, official data released for the April-June quarter showed that the German economy shrank by a record 10.1 percent due to the COVID-19 induced lockdown. Federal statistics agency Destatis called the quarter-on-quarter decline in the gross domestic product (GDP) "historic" and far bigger than any slump seen during the 2008-2009 financial crisis.

Peter Altmaier, the country's minister for Economic Affairs, had earlier warned that the pandemic would push Europe's top economy into its "worst recession" in its postwar history, ending a decade of growth.

Destatis said the GDP, index adjusted for inflation, seasonally and calendar effects plummeted to 94.26 in the April to June period.

"Most recently, the chain index was lower at 93.19 in the fourth quarter of 2010, so that's roughly 10 years ago," the statistics office said, as quoted in the express.co.uk.

Destatis said efforts to contain the virus outbreak had triggered "a massive slump" in both exports and imports, although government spending had increased over the period.

But the worst pain may already be over as Germany appears to have withstood the coronavirus shock better than many of its neighbours. It began reopening factories, shops and restaurants in early May, allowing economic activity to pick up again.

Germany also managed to avoid mass layoffs, with separate data on Thursday showing that unemployment was stable at 6.4 percent in July, the same rate as June.

Despite the encouraging signs, the German Institute for Economic Research (DIW) has warned it could take two years before the massive slump in the second quarter can be recovered with the economic chief Claus Michelsen saying: "The signs are clearly pointing to recovery.