The German economy shrank more than expected in the first quarter as coronavirus-related restrictions spurred householders to put more money than ever into savings, data showed on Tuesday.
Europe's largest economy contracted by 1.8 per cent quarter on quarter and by 3.1 per cent on the year, the Federal Statistics Office said. The readings, for which a Reuters poll had forecast drops of 1.7 per cent and 3.0 per cent respectively, were significantly weaker than the euro zone average. German households' disposable income increased slightly as the government ploughed billions of euros into job protection schemes and cash handouts such as extra child benefits. But curbs linked to containing the pandemic also made it harder for consumers to spend it.
“The drop in consumption is colossal," VP Bank Group economist Thomas Gitzel said. Household spending fell by 5.4 per cent on the quarter as the savings rate rose to a record high of 23.2 per cent. Company investments in machinery and equipment fell slightly, though construction activity rose.
Exports increased by 1.8 per cent on the quarter helped by strong demand from the US and China, while imports rose 3.8 per cent, meaning net trade pushed down overall growth as well.
Germany's biggest landlords seek to reassure Berliners over $22-bn merger
Germany's two biggest listed landlords Vonovia and Deutsche Wohnen have agreed to join forces in an 18 billion-euro ($22 billion) deal that they hope will defuse tensions over soaring rents ahead of general elections in September.
The country's biggest merger this year will create a European real estate giant with 550,000 apartments. It comes as Deutsche Wohnen has become the focus of popular anger in Berlin over tenant rights and affordable housing.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)
Dear Reader,
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.
Digital Editor
RECOMMENDED FOR YOU