German economy contracts at record pace 9,7%

The German economy contracted by a record 9.7% in the second quarter as consumer spending, company investments, and exports collapsed at the height of the COVID-19 pandemic, the statistics office said on Tuesday.

Report informs citing the Reuters, the economic slump was much stronger than during the financial crisis more than a decade ago, and it represented the sharpest decline since Germany began to record quarterly GDP calculations in 1970, the office said.

Still, the reading marked a minor upward revision from an earlier estimate for the April-June period of -10.1% that the office had published last month.

Consumer spending shrank by 10.9% in the quarter, capital investments by 19.6% and exports by 20.3%, seasonally adjusted data showed.

Construction activity, usually a consistent growth driver for the German economy, fell by 4.2%.

“The second quarter was a complete disaster,” VP Bank economist Thomas Gitzel said. “Regardless of whether it is about investments, private consumption, exports, or even imports -everything was in free fall.”

The only bright spot was state consumption, which rose by 1.5% on the quarter due to the government’s coronavirus rescue programs, the office said.