Germany facing its “worst recession” for the past 50 years

L’Allemagne face à sa «pire récession» depuis 50 ans

Photo: Tobias Shwarz Agence France-Presse
The German Economy minister, Peter Altmaier

The German government is expecting the worst recession since the early calculations in 1970, due to the coronavirus, with a decrease of GDP from 6.3 % this year, announced on Wednesday the minister of Economy, Peter Altmaier.

This projection, which is based on an exercise, “progressive and moderate” restrictions in place to limit the spread of the pandemic, projected to rebound by 2021, with a growth of 5.2 % of gross domestic product.

“We’re going to live through the worst recession in the history of the German Republic,” commented Mr. Altmaier.

“After ten years of growth, the consequences of the pandemic, plunging our economy into a recession, “and pose” a great challenge economic and political, ” said Mr. Altmaier.

“The greatest fall occurs in the second quarter,” added the minister, before a “stimulus” expected from the activity.

The German GDP is expected to fall 10 % in the second quarter, never seen before in recent history, according to projections common to the main economic institutes, published at the beginning of April.

Moreover, “the labour market is under strong pressure,” notes Mr. Altmaier. At least three million people were in the march and April short-time work (” Kurzarbeit “).

If an increase in the unemployment rate to 5.8 % is expected, “it is significantly limited by the use” of this device, in which the German State pays two-thirds of the salary of the employees concerned, said Peter Altmaier.

Déconfinement careful

Since last week, Germany has launched a déconfinement progressive, starting with the re-opening of some shops.

“We must not risk a second increase of infections” and prevent a new ” uncontrolled spread “, he warned, adding that he is in favour of a further easing of restrictions ” if the numbers allow it “.

“This is a race of endurance” and ” we must not jeopardise the success achieved so far.

The export industry is the backbone of the German economy is particularly affected by the crisis, which reached its opportunities and dramatically slows down international trade.

The government expects a drop in exports of 11.6% in 2020, before a recovery to +7.6% in 2021 ; and imports must decrease by 8.2% in 2020 before progressing 6.5 % next year. In both cases, the level of 2019 will therefore not be found before 2022 at least.

To cope with the crisis, the German Parliament has already adopted at the end of march, a plan of almost 1100 billion euros, including devices for public guarantees of loans and direct aid to enterprises, especially for SMES.

Several large companies have also already benefited from this support via guaranteed loans, including the tour operator TUI and the supplier Adidas as the company Lufthansa is negotiating an assistance worth several billion euros which could see the State up to the capital of the group.

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