The economy of Germany, the largest in Europe, shrunk by 5 percent in 2020 because of the crisis. The German Federal Statistical Office reported this on the basis of a preliminary estimate. This put an end to ten years of growth for the German economy.
The German economy suffered from lockdowns and weaker exports, for example because the demand for German cars was under pressure. In the spring, factories in Germany were temporarily closed due to the outbreak of the virus. In addition, Germans held their hands because of the uncertainty about the crisis, resulting in a reduction in consumer spending. Less investment was also made by companies.
The services sector, such as catering, tourism and retail, also had difficulties due to shop closures and lockdowns. In particular, the second quarter saw a sharp decline in the German economy. After that, recovery was started. In order to counter the crisis, the German government came up with extensive support measures for the economy. Measures were also taken to prevent a sharp rise in unemployment.
The contraction was less pronounced than during the financial crisis in 2009, when the German economy fell by 5.7%. The decline was also a little less strong than economists had feared. In 2019, Germany’s economy grew by 0.6 percent.
The statistical office also reported that the German budget deficit reached 4.8 percent of GDP, compared with a plus of 1.5 percent in 2019. This amounts to a deficit of more than EUR 158 billion. It is the first time since 2011 that the country has had a budget deficit as a result of massive government spending to curb the crisis.
The value of trade between Germany and the Netherlands was close to EUR 193 billion in 2019. In addition, the Port of Rotterdam is of great importance as a transit point for goods to Germany.
Oliver I. Kjeldsen has a corporate finance and extensive expertise in company audit. He grants us amazing insights on taxation, international affairs and friendly advice on nearly any topic of interest. His email is firstname.lastname@example.org