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Economy Germany's

Germany’s Economy Contracted A Record 10.1% In 2nd Quarter – NPR

A view of the banking district in Frankfurt, Germany, on Thursday. Government statistics show the German economy contracted by 10.1% in the second quarter of this year.

Michael Probst/AP


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Michael Probst/AP

A view of the banking district in Frankfurt, Germany, on Thursday. Government statistics show the German economy contracted by 10.1% in the second quarter of this year.

Michael Probst/AP

Economic output in Germany — the powerhouse of Europe — shrank during this year’s second quarter by 10.1% compared with the same period last year. That double-digit downturn is the steepest since that country’s Federal Statistical Office began tracking quarterly economic data a half-century ago.

“It’s an astounding figure — minus 10.1%,” writes Henrik Böhme, an economic analyst for German state broadcaster DW. “Never before in Germany’s postwar history has the country’s economy slumped as sharply as in the second quarter of 2020.”

The historic slump, which surpasses a 9% contraction forecast by economists polled by Reuters, occurred during a pandemic in which more than 200,000 Germans — a little over 0.2% of the nation’s 84 million inhabitants — have been confirmed infected by the coronavirus, according to Johns Hopkins University’s pandemic tracking website.

“The [10.1%] figure isn’t surprising,” Böhme adds, “particularly at a time when the factories stopped producing, container ships stopped loading, services couldn’t be provided, trade fairs no longer took place and restaurants had to stay closed.”

3 Months Of Hell: U.S. Economy Drops 32.9% In Worst GDP Report Ever

The decline in Germany’s output last quarter, if calculated on an annual basis, would amount to 34.7%. That’s a steeper drop than the annualized 32.9% plunge in the U.S. economy during the second quarter of 2020, the sharpest downturn ever recorded for American output. With more than 4.4 million known cases, the U.S. coronavirus infection rate of about 1.3% is more than six times what Germany’s is.

Despite the economic contraction, Germany has not suffered a large loss of jobs. Unemployment for June stood at 4.5%, according the Federal Statistical Office, while the number of people employed fell by 1.4% compared with this year’s first quarter.

German firms surveyed this month by the Ifo Institute in Munich showed increasing optimism about economic recovery. That was reflected in a rise in the Ifo Business Climate Index from 86.3 points in June to 90.5 points in July.

Still, Germany’s prospects remain closely tied to the pandemic’s impact elsewhere.

“The extremely export-oriented German economy is likely to suffer all the more,” analyst Böhme notes, “as important markets like the United States, as well as countries like Brazil and India, are not really getting the pandemic under control.”

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Economy Japan's

Japan’s economy fell to recession in Q1 – MarketWatch

TOKYO–Japan’s economy contracted an annualized 2.2% in the January-March quarter, government data showed Monday, confirming a recession due to the impact of the coronavirus pandemic.

The revised figure was less than the 3.4% contraction in a preliminary estimate from the Cabinet Office in May. Two straight quarters of contraction is one definition of a recession.

The revised data showed that private consumption declined 0.8% from the previous quarter, compared with an initial estimate of a 0.7% fall.

Meanwhile, capital investment rose 1.9%, stronger than the initial estimate of a 0.5% decrease.

Economists say the upward revision to capital expenditure may not accurately reflect the impact of the pandemic because many companies didn’t submit their plans by the deadline.

Those who were unable to reply are likely to be affected more seriously by the virus, they say.

Write to Megumi Fujikawa at megumi.fujikawa@wsj.com

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Economy Japan's

Japan’s economy falls into recession in Q1 – MarketWatch

TOKYO — Japan’s economy fell into a recession by one common definition in the first quarter of 2020, with worse expected in the current quarter.

The world’s third-largest economy after the U.S. and China shrank an annualized 3.4% in the January-March period, following a 7.3% contraction in the previous quarter when the national sales tax rose to 10% from 8%. Two straight quarters of contraction is one definition of a recession.

Economists polled by data provider Quick had expected a 4.8% annualized contraction in the quarter.

The coronavirus pandemic pushed down spending by households and companies and kept tourists away. Private consumption fell 0.7% on quarter as people refrained from leisure and dining out to avoid infection. Capital expenditures by companies dropped 0.5%.

Economists expect that the economy shrank at an annualized pace of 20% or more in the current quarter. Prime Minister Shinzo Abe declared a national state of emergency in April, which led many stores and restaurants to close. Most foreign visitors are barred from entering the country` and domestic travel has mostly stopped.

Last week Mr. Abe lifted the state of emergency in 39 of 47 prefectures. It still applies in Tokyo and Osaka but is expected to end nationwide in the next week or two.

“Sharp declines in private consumption, housing investment and capital spending are inevitable after April due to the state of emergency and the subsequent request for closing businesses,” said Taro Saito, an economist at NLI Research Institute.

Write to Megumi Fujikawa at megumi.fujikawa@wsj.com

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Economy German

German economy posts sharpest contraction since the financial crisis – CNBC

BERLIN, GERMANY – APRIL 23: German Chancellor Angela Merkel (CDU) sits at the Bundestag on April 23, 2020 in Berlin, Germany. Germany is still at the beginning of the coronavirus pandemic and will have to live with it for a long time, the Chancellor said.

Maja Hitij

German GDP (gross domestic product) shrank by 2.2% in the first quarter compared to the final three months of 2019, official preliminary statistics revealed Friday.

The contraction, fueled by the early stages of nationwide lockdowns implemented in March to curtail the coronavirus pandemic, was in line with analyst expectations. But it represents the sharpest decline since the first three months of 2009, in the throes of the global financial crisis.

On the year, Germany’s economy shrank by 2.3% from January to March compared to the same period in 2019, having posted a 0.4% annual rise in the fourth quarter.

The numbers are expected to get worse before they get better. The German Statistical Office has forecast a 10% plunge in GDP for the second quarter, dependent on the success of lifting lockdown measures.

Germany shuttered shops and factories in mid-March and began easing its lockdown restrictions in late April, having experienced a considerably lower death rate than other major European countries. However, significant portions of the economy remain shut.

According to the Robert Koch Institute for Disease Control, the transmission rate for the coronavirus remained below the key threshold of 1 in Germany following initial easing of lockdown measures. As of Friday morning, Germany has confirmed 174,478 cases and 7,884 deaths, according to Johns Hopkins University.

Despite the steep downturn, Europe’s largest economy has fared better than France and Italy, which posted first-quarter contractions of 5.8% and 4.7% respectively.

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Economy heading

The UK economy is heading for its worst crash in 300 years – CNN

London (CNN Business)The UK economy is heading for its worst crash in more than 300 years because of the coronavirus pandemic, according to a new forecast from the Bank of England.

The central bank said Thursday that the British economy could shrink by 14% this year. That would be the biggest annual contraction since a decline of 15% in 1706, based on the bank’s own best estimate of historical data.
Governor Andrew Bailey said it would respond as necessary to support the economy as the coronavirus threat evolves, but stopped short of announcing any new stimulus measures.
In a report that examined the impact of the pandemic, the Bank of England said that GDP contracted by 3% in the first quarter of this year and would fall by as much as 25% in the second quarter, leaving the economy about 30% smaller than it was at the end of 2019. Unemployment is expected to increase to 9%.
The central bank expects a swift economic recovery in 2021, but it cautioned that its forecast, which assumes a gradual easing of social distancing measures and “very significant” monetary and fiscal stimulus, depends on the “evolution of the pandemic, and how governments, households and businesses respond.”
And the bank warned that it’s more likely to have underestimated the scale of the economic crash than to have overstated it.
Economists at Commerzbank said that they expect more economic scarring and a slower recovery. Historic examples suggest there will be a more permanent loss of output, they said, and more persistent unemployment.
“Current conditions are unprecedented in our lifetime and all forecasters are struggling to make out where the economy stands now, never mind what happens in future. But it is clear that the next few months are going to produce some of the biggest output falls on record,” said Commerzbank economist Peter Dixon.
Britain has more than 200,000 confirmed coronavirus cases, and more than 30,000 people have died from the disease. There has been widespread speculation that the government is preparing to ease social distancing restrictions in place since late March as early as Monday, but a government minister said Thursday that a decision has not yet been made.
“We haven’t made any final decisions on these issues yet,” Brandon Lewis told the BBC. “I would just say to people to not get too carried away with what we may be reading.”
Some European countries have taken tentative steps to reopen their economies as the region is slammed by what EU officials describe as the worst economic shock since the Great Depression. The EU economy will shrink by a record 7.5% this year, the European Commission warned this week, and the drop could be even more precipitous across the 19 countries that use the euro.
The Bank of England has already taken some steps to counter the economic shock caused by weeks of lockdown measures and lost production, slashing interest rates to a record low in March and launching a £200 billion ($248 billion) bond buying program.
The UK government has meanwhile launched a rescue package that includes tax relief for businesses totaling £30 billion ($37 billion) and interest-free loans for up to 12 months. The government is also paying salaries for more than 6 million workers for an initial period of three months.
More action is likely to be taken in the coming months. Two members of the central bank’s monetary policy committee voted to pump another £100 billion ($124 billion) into the stimulus program, and outside economists expect other members to agree once the situation becomes clearer.
If the coronavirus continues to spread, and the government is forced to extend or reintroduce lockdowns, much more than £100 billion could be needed.
“The bank may end up going much further,” said researchers at Capital Economics.

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Economy Trump

Trump economy faces long-term disaster as jobs data looms – CNN

(CNN)The staggering economic pain — perhaps the worst since the 1930s — of the American economy in the time of coronavirus will be graphically underscored in two new rounds of unemployment data that are due on Thursday and Friday.

The figures will show Americans who have and will lose their livelihoods as common victims of the cruelest public health crisis in 100 years, along with the sick and the more than 73,000 people who have so far died.
Another 3.2 million Americans filed first-time claims for unemployment benefits last week, after factoring in seasonal adjustments, the Department of Labor reported Thursday, bringing the total number of seasonally-adjusted initial claims filed since mid-March to 33.5 million.
The prospect of a prolonged economic slump will have important implications in politics. It is already threatening to dampen memories of the roaring economy that President Donald Trump was banking on to carry him to a second term. It may also provide an opening to presumptive Democratic nominee Joe Biden who helped bring the country back from the last economic crisis in the Obama administration.
Every day brings signs that what first looked like temporary job cuts could turn into permanent layoffs. GE, Airbnb and United Airlines this week, for instance, announced cuts in thousands of positions as business dries up. Discouraging news on the wider penetration of the virus raises the possibility of new spikes in infection that could further complicate the path to a full recovery.
The emerging reality that the “rocket”-like rebound the President predicted is unlikely may be behind Trump’s increasingly frantic statements on a emergency he has also claimed will soon be over.
“We went through the worst attack we’ve ever had on our country,” he said on Wednesday. For weeks earlier this year, Trump was in denial and painted the threat from the virus as tiny.
“This is really the worst attack we’ve ever had. This is worse than Pearl Harbor. This is worse than the World Trade Center,” Trump said Wednesday.
Trump also called on schools to open and cut off a nurse visiting the Oval Office who observed that personal protective equipment had been “sporadic” in hospitals.

Economy changes election equation

The worsening economic news will introduce a new dimension into the November presidential election clash between the President and Biden.
Trump is already under heavy pressure over his erratic management of the coronavirus pandemic and his initial assurances that a disease that has now infected more than a million people in this country didn’t pose a threat.
The economy has generally been an area where Trump has enjoyed majority support during his three years in office. The President’s base is as firm as it ever was. But persuadable voters will now have two new questions to answer in the election: Is Trump the best candidate to lead the country out of both a prolonged duel with Covid-19 and to put the economy that has been shattered by the pandemic back together?
A Monmouth University poll this week found that Biden has widened his national lead over the President to nine points. Other polls have also shown the former vice president ahead.
The President insisted on Wednesday that he could not be blamed for the virus-related economic plunge and argued that he was the ideal choice to bring the good times rolling back.
“I built the greatest economy — with a lot of great people — that we’ve ever had, and I’m going to rebuild it again,” Trump vowed.
“We’re going to have a great economy very soon. Much sooner than people think. Much sooner.”

Job losses ‘jaw dropping’

The economic damage is almost inconceivable already and it will be laid bare in two sets of what are likely to be awful jobs numbers on Thursday and Friday.
First up was weekly jobs data on initial unemployment claims — the measure that has recorded the terrible toll of weekly layoffs that have now topped 35 million people as the economy has gone into suspended animation.
To end the week, the Trump administration is braced for what could be the most disastrous unemployment numbers since the Great Depression. Economists polled by Refinitiv are expecting an unemployment rate at 16%. It’s possible that 10 years of jobs gains will have been wiped out in just a couple months.
One of the President’s top economic advisers, Kevin Hassett, has been preparing the country for an unemployment rate of up to 20%. That’s more than 15 percentage points higher than the 50-year lows in the jobless rate that Trump was celebrating just weeks ago.
The desperate economic situation is sharpening the dilemma between public health and the preservation of basic livelihoods that Trump appears to have already resolved.
California Gov. Gavin Newsom, a Democrat, said Wednesday that 4.1 million people have already lost employment in his state.
“The numbers are jaw dropping and it is alarming,” he said.

Trump calls on Americans to be ‘warriors’

Trump is now openly campaigning for the country to open up, despite studies that show tens of thousands of people could die in new outbreaks of the disease.
“We have to be warriors. We can’t keep our country closed down for years,” Trump said. “I think people won’t stand for it, actually. I don’t think our people will stand for it.”
But despite widespread demonstrations by conservative groups against governors who are keeping their states shut down, polls suggest that many Americans are wary of resuming normal life.
Nearly two-thirds of those asked in the Monmouth poll were concerned that states will begin lifting restrictions too quickly. And only 33% share Trump’s implied view that stopping the economy from going into a deep, lengthy downturn is more important than stopping people from getting sick.
The initial economic trauma of the shutdowns is likely to be exacerbated by sobering facts on the state of the pandemic. While cases are dipping in worst-hit regions such as New York and New Jersey, they are actually rising in many states yet to peak.
Maybe the US will get lucky and will be spared widespread new pandemic hot zones. But science suggests that states that are now reopening in the absence of robust testing and tracing programs will experience a spike in cases that could cause a second economic shockwave. Given the incubation period of the disease, it will several weeks before the impact of eased restrictions begins to show up in serious illnesses.
Many of the states that are getting back to business are nowhere near meeting the 14-day period of consecutive infection rates that are recommended by the White House prior to opening.
In Texas, for instance, where GOP Gov. Greg Abbott has allowed businesses such as restaurants to reopen at much reduced capacity, there were 1,000 new cases of coronavirus reported on Wednesday.
If new infections do emerge on a wider footprint than the previously worst-affected areas on the coasts and in the city, the consequences for the economy could be even more serious.
Service jobs in restaurant, leisure, and travel sectors are unlikely to recover when the public is wary about going out.
And rising infections could take another swipe at the health sector which helped drive recent jobs gains but has been hammered in recent months, with elective surgeries and routine appointments canceled.

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Economy Eurozone

Eurozone Economy Suffers Record Contraction, Steeper Than U.S. – The Wall Street Journal

The public-health crisis sparked by the new coronavirus ricocheted through Europe’s economy in the first quarter, causing a record decline that was more severe even than in the U.S., an ominous sign for the global economy.

The eurozone’s gross domestic product fell 3.8% versus the final three months of 2019, according to data released Thursday, as measures imposed to limit the pandemic’s spread stalled everything from schools to factories to churches.

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