German factory orders plunge as global demand dries up
German factory orders plunged in April at a much faster rate than expected as coronavirus hit the global economy and caused demand to dry up.
Factory orders dropped 25.8 per cent in April compared to a month earlier, when they fell by 15 per cent. The figure was far below the 19.7 per cent contraction analysts had been expecting.
Figures from the Federal Statistics Office showed that domestic orders dropped 22.3 per cent while orders from abroad were down 28.1 per cent.
However, the economy ministry said in a statement that “the low point of the industrial recession should now have been passed”.
It came as Germany gradually reopens from its coronavirus lockdowns, which have been more successful than its neighbours in containing the illness.
Germany has suffered 8,600 deaths from 185,000 cases. Its neighbour France has had 29,000 deaths while the UK has seen 40,000 die.
Nonetheless, the German economy is set to contract rapidly this year. The country’s central bank thinks GDP will shrink by seven per cent this year. The recovery will be slow, with growth of three to four per cent per year for the next two years, the Bundesbank said.
However, the German government has stepped in to try to tackle the downturn, casting aside its previous attachments to the “black zero” balanced budget policy.
Chancellor Angela Merkel’s coalition on Wednesday signed off on a stimulus package worth €130bn to aid firms and workers struggled amid the crisis.
It includes measures to slash VAT, give parents a cash handout of €300 (£270), provide tax relief for companies and lower energy prices.
The European Central Bank has also stepped in to try to shore up the Eurozone economy. Yesterday it ramped up its bond-buying programme by a further €600bn, taking it to €1.35 trillion.