The German economy has plunged into a recession after suffering its steepest quarterly contraction since the 2009 financial crisis as shops and factories were shut down in mid-March to fight the spread of the coronavirus, preliminary data shows.
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The 2.2 per cent first-quarter contraction is a foretaste of worse to come. Economists expect a deeper slump in the second quarter as the lockdown extended well into April and early May and sectors such as tourism and in-door gastronomy remain shut.
Still, Germany appears to be faring better than neighbouring France and Italy, whose economies contracted by 5.8 per cent and 4.7 per cent respectively in the first quarter.
This is partly due to a decision by Germany's 16 states to allow factories and construction sites to stay open and an unprecedented rescue package by Chancellor Angela Merkel's government, including state aid that allows employers to switch employees to shorter working hours to avoid mass lay-offs.
Output data for the fourth quarter was revised to a contraction of 0.1 per cent from a previously reported stagnation, which meant Germany was technically in a recession after two successive quarterly output slumps, the data shows.
On the year, gross domestic product in Europe's largest economy fell by 2.3 per cent from January to March after a 0.4 per cent expansion in the previous three months, according to Friday's seasonally adjusted figures from the Federal Statistics Office.
Also in European data on Friday, official figures showed Portugal's economy reversed its growth trajectory to contract a steep 3.9 per cent in the first quarter.
Australian Associated Press
