GERMAN GDP PLUNGES 9.7%; GOV’T SPENDS MORE TO PROP UP ECONOMY

The coronavirus pandemic inflicted a historic blow to Germany's economy in the second quarter, when gross domestic product (GDP) collapsed by 9.7 per cent as the state dug deep to spend its way out of the crisis, according to official data released on Tuesday, Rachel More reported for Deutsche Presse-Agentur (dpa) on August 25, 2020.

The quarterly fall in GDP was a slight improvement on the Federal Statistical Office's (Destatis) first estimate of 10.1 per cent for the April-June period, when restrictions to stem the spread of the virus hit Europe's largest economy with full force.

The single-digit plunge was still, however, far worse than seen at the peak of the financial crash more than a decade ago, when the German economy contracted by 4.7 per cent in the first quarter of 2009. As a result, it was the worst drop since records began in 1970.

Meanwhile, stimulus measures designed to support consumers and businesses through the worst of the crisis resulted in the state spending 51.6 billion euros more than it took in during the first half of 2020, Destatis said. Measured as a percentage of gross domestic product, the financial deficit came in at 3.2 per cent, it added. In the same period last year, a surplus of 2.7 per cent was recorded. Germany last recorded a fiscal deficit for the entire year in 2011. General government revenue was down by 3.6 per cent in the first half of 2020, marking the first year-on-year decline since 2010. This came as government expenditure soared by 9.3 per cent.