GDP Growth Rate for Germany (2020 Q1)
On 15th Mai 2020, German Federal Statistics Office (DESTATIS) has announced the recent figures for the German gross domestic product (GDP) growth rate for the first quarter of 2020. As expected before, Covid-19 had a drastic effect on the output. The price-, seasonally and calendar adjusted GDP fell sharply by 2,2% compared to the fourth quarter of 2019. Change on the same quarter a year earlier occurred as also 2,3% down.
This drop is the largest decrease since 2008/2009 Global Financial and Economic Crisis and second after the German Unification in 1989. In the press conference it is stated, that household consumption expenditure and gross fixed capital formation in machinery and equipment fell sharply. On the other hand, employment remained almost unchanged. One of the reasons for that is being that short-time workers are counted as persons in employment.
Lastly, there has been a revision for previous results and methodology. Due to this change 2019q4 data became to negative territory with -0,1% and as 2020q1 GDP growth rate is also announced as -2,2% we can clearly say that German economy is at the moment in recession. Therefore I have also updated my tables and graphs. I add the explanation hereby as a snapshot, but you can visit the official website for further info.
Ergun UNUTMAZ, 17.05.2020
Recession is a state, which was previously called officialy, when there is a decline in real GDP for two consecutive periods in an economy, which occurs in the below zero level. It includes massive contraction in economic activites and substantial increase in unemployment. Sometimes detorriation takes longer for a couple of quarters. But nowadays National Bureau of Economic Research (NBER) adapts a more ambiguous definition:
“A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.”