With the Coronavirus wreaking havoc to many of the world’s economic activities, it even hit Germany, one of Europe’s strongest economies. But their unemployment rate was hurt only slightly.
Historical drop in Germany
The German GDP has dipped by 10 percent for the previous quarter, which is one of the rare things to happen for Europe’s powerhouse economy. The latest data even surpassed analysts’ expectations of 9 percent.
It is the largest drop for the country’s economy since the GDP assessments were started on 1970, per the report published by Germany’s statistic office which was published Thursday. It succeeded another decrease in an earlier quarter, with economy dropping by 2 percent.
— Bloomberg (@business) July 30, 2020
Economic weak points
The pandemic has also forced Germany to impose restrictions in order to curb the spread of the novel coronavirus. This in turn took a hit to Germany’s economic activities. This included pulling down exports and imports on top of reduced spending among households and lower capital among machineries and equipment. Meanwhile, government consumption spending did not suffer.
However, with all the shrink in economic activity, Germany is seeing only a slight rise in unemployment rate, which is one of the aftermath of the health crisis. Joblessness climbed to 4.2 percent, following a 3.8 percent figure from March, but unemployment is still among the concerns for the country. For comparison, the America has an unemployment rate of 11 percent.
With manufacturing also suffering in the country, Volkswagen, has reported a 23 percent drop in revenue with sales dipping by 27 percent. The company, which provides almost 294,000 jobs in Germany expects a likely reduction by 15-20 percent in the worldwide demand for new vehicles. Volkswagen CFO even stated that “the first half of 2020 was one of the most challenging in the history of the company due to the COVID-19 pandemic.”