The German economy contracted in Q2 for the first time in 50 years

The German economy contracted in Q2 for the first time in 50 years

Europe’s largest economy took a hit from the pandemic

All eyes were on Europe today, as the German Destatis (The Federal Statistics Office) and the Federal Employment Agency released their quarterly and monthly reports.

For the German economy was a day of records, as far as the economy is concerned. In the past quarter, the economy had the worst deterioration in Q2 since 1970, according to Destatis. The GDP fell by 10.1%, exceeding the economists' expectations of 9%. The drop was due to a decrease in exports and imports of goods and services. The household final consumptions expenditure and capital formation in machinery and equipment dropped as well. From analysts’ point of view, 40% of the losses might be recovered in the third quarter.

Not only the GDP contracted, but also unemployment. The latest report showed that the number of unemployed people dropped din July by 18,000 reaching 2.23 million people. The figures came against the 43,000 people forecasted to be unemployed.

Currently, the unemployment rate is 6.4% after adjustment.

The market reacted aggressively, and Germany30 lost 2.5% after the report.

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Sources: forexfactory.com, reuters.com


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