Germany’s Industrial Production Fell in April

Germany has the largest economy in the European Union, also it has one of the largest economies in the world. Nevertheless, even for the local economy, the coronavirus pandemic created a lot of challenges.

As a reminder, the German economy is a key growth driver for the euro zone. It makes sense as it has the largest economy among euro zone member states. April can be described as the worst month ever for the local economy. Let’s have a look at Germany’s industrial production.

It is worth mentioning that, industrial production dropped by 17.9% in April. For example, in March industrial production fell by 8.9% Moreover, compared to the same period of time in 2019, industrial production dropped by 25.3%. As a result, it was the largest decline since the beginning of the times series in January 1991.

This information came from Germany’s statistics office Destatis. Importantly, the auto industry recorded a decline of 74.6% month-on-month. It was the worst result compared to other sectors.

Interestingly, the numbers came after data on June 5, showed orders for Germany’s industrial goods fell 25.8% month-on-month in April.

Notably, despite having a far less severe pandemic in comparison to its western European peers, the country’s suffered serious losses. Germany reported more than 186,000 cases. However, the death toll stands at 8,802. For example, in France, more than 29,200 died as a result of the coronavirus pandemic.

Germany’s economy and coronavirus pandemic

The country’s government began to lift lockdown measures gradually on April 20. As a result, smaller retailers and car dealerships opened in April. Moreover, car production restarted at the end of April. Also, schools reopened in early May. This is not the end of the story as Germany plans to relax a travel ban to other European countries on June 15.

The Ifo institute expects more short-term declines in industrial production. Importantly, the Ifo institute’s index of production expectations increased to negative 20.4 points in May. In April, the index stood at negative 51.0 points. Despite the biggest month-on-month increase in the index since German unification, the state of the economy is not ideal.

Moreover, the country’s government wants to speed up the implementation if its giant stimulus package. The government of Germany plans to approve large parts of the 130 billion euro ($147 billion) package during the extraordinary meeting on Friday.

Importantly, the cabinet is expected to lay the foundation for the agreed temporary cut in value-added tax worth some 20 billion euros. Also, the government plans to spend 4 billion euros on cash handouts for parents. Moreover, it wants to support electric cars by providing more than 2 billion euros for this goal.