The German economy contracted at the fastest pace since the global financial crisis, as initially estimated, due to the coronavirus pandemic, revised data from Destatis showed on Monday.
Gross domestic product fell 2.2 percent sequentially, the biggest fall since the first quarter of 2009 and the second biggest since the German unification. The rate came in line with the estimate published on May 15. Data showed that the impact of the pandemic was quite serious during the first quarter despite the spread of coronavirus did not have a major effect in January and February.
GDP had dropped 0.1 percent in the fourth quarter of 2019. Two consecutive quarters of contraction indicates that the largest euro area economy entered a technical recession.
The government measures to contain the spread of coronavirus pandemic weighed heavily on household consumption and trade.
On the expenditure-side, household final consumption decreased 3.2 percent sequentially. At the same time, gross fixed capital formation in machinery and equipment was down 6.9 percent.
Final consumption expenditure of general government and gross fixed capital formation in construction had a stabilizing effect. They prevented an even larger GDP decrease, Destatis said.
While general government final consumption expenditure rose 0.2 percent, gross fixed capital formation in construction increased notably by 4.1 percent.
Foreign trade also declined in the first quarter. Exports were down 3.1 percent and imports of decreased 1.6 percent.
On a yearly basis, GDP declined by calendar-adjusted 2.3 percent in the first quarter versus a 0.4 percent rise in the fourth quarter. The annual rate matched the preliminary estimate.
Price-adjusted GDP dropped 1.9 percent annually, in contrast to an expansion of 0.2 percent seen in the fourth quarter but in line with flash estimate.
As the first quarter performance is the result of 'only' two weeks of lockdown and supply chain disruptions due to lockdown measures in Asia, it does not need much analytical skill to predict a much stronger slump in the second quarter, ING economist Carsten Brzeski said.
Three more weeks of lockdown and a very gradual lifting of some measures do not bode well for the second quarter, the economist added.