Economy

Germany is slipping into recession, but entrepreneurs are still hopeful

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The corona crisis hits the German economy hard. Gross domestic product (GDP) shrank in the first quarter by 2.2 percent compared to the previous quarter, as the Federal Statistical Office announced this morning. The Wiesbaden authority thus confirmed the first data. The slump at the beginning of the year was the largest quarterly decline since the global financial and economic crisis of 2008/2009 and the second largest since German reunification.

Consumer spending and exports collapsed in the first quarter. Companies invested significantly less in machinery, equipment, vehicles and other equipment. Increased construction investment and government spending prevented the crash, according to the information.

Entrepreneurs have cautious hope

And yet: After this historic slump, the mood in Germany has brightened somewhat due to the Corona crisis. As announced by the Munich Ifo Institute on Monday, the business climate it raised rose in May by 5.3 points to 79.5 points. The rise came from a record low. Analysts had expected an average increase to 78.5 points.

The
first easing of the corona restrictions gave a glimmer of hope,
commented Ifo President Clemens Fuest. While the companies surveyed said
If the current situation was a little worse, the prospects for the
coming six months noticeably better rated. In all considered by the Ifo
The business climate brightened in economic sectors.

“The restart of the economy is a silver lining for many companies,” says Thomas Gitzel, chief economist at Liechtenstein’s VP Bank. At the same time, he dampened expectations that were too high: “The companies are showing signs of life again, but there can be no talk of vitality.” The German economy will not switch quickly to the growth path it has been in in recent years. “It will be a long time before the German economy runs reasonably well again.”

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