FRANKFURT: The German economy has turned the corner following the crisis caused by the coronavirus pandemic, with growth continuing through July and into August, albeit at a slower pace, the central bank reported on Monday.
“Following the massive decline in gross domestic product [GDP] in the spring, by almost a tenth compared with the previous period in seasonally adjusted terms, a strong countertrend could follow in the third quarter of 2020,” the Bundesbank said in its report for the month of September.
“At the same time, the pre-crisis level will not be attained in the summer. This applies equally to industry as to services as a whole,” it added.
GDP in Europe’s largest economy fell 9.7 per cent in the second quarter, as compared with the first, in the sharpest fall since quarterly figures were first kept by the Federal Statistical Office (Destatis) in 1970. Recent Destatis figures also show a V-shaped recovery following the sharp fall, which was particularly steep in April. Provisional GDP figures for the third quarter are to be published on October 30.
Forecasts for the year as a whole have been less pessimistic than previously. “Over the rest of the year, the recovery could continue, but lose pace,” the Bundesbank says in its report. But it was less optimistic on the banking sector. “Depending on the speed of overall economic recovery, loan default risks could materialise in the first instance, necessitating value corrections and write-offs,” the Bundesbank said. — dpa
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