Sport German economy is growing at record speed - but partial lockdown clouds prospects
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Berlin (Reuters) - After the historic slump in the Corona crisis, the German economy grew faster than ever in the summer.
The gross domestic product (GDP) rose in the spring from July to September by 8.2 percent compared to the previous quarter, as the Federal Statistical Office in Wiesbaden announced on Friday. Experts fear, however, that the partial shutdown will make things more difficult again by the end of the year, possibly even leading to a recession. The forecasts for 2021 should therefore be treated with caution. A hard Corona winter can destroy the expected economic recovery next year: "We are currently at a crossroads," said Federal Minister of Economics Peter Altmaier.
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The second wave with the recent rapid increase in new infections must be broken, which is why the government, together with the federal states, decided this week to renew restrictions on public life, said Altmaier. "The pace of catching up will now clearly lose steam in view of the recent partial lockdown," predicts foreign trade president Anton Börner. The sectoral closings are "a significant burden" for economic recovery, even if they should be justifiable and appropriate for health reasons.
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Federal Finance Minister Olaf Scholz sees the upcoming partial lockdown in November as the "month of truth" coming to Germany: "We will do everything to help Breaking Infectious Dynamics to Protect Lives and Our Economy. " The Saarland Prime Minister Tobias Hans (CDU), however, considers an extension of the lockdown into December possible if the number of infections does not decrease significantly. In view of such prospects, according to chief economist Stefan Bielmeier from DZ Bank, a relapse into a "presumably slight recession" now appears not unlikely. And the further course of the economy in the coming year will largely depend on the successful development and distribution of a corona vaccine.
Europe's COVID-19 outbreak is worsening from disaster to catastrophe, as the US scrambles to contain its third wave
France and Germany announced new lockdowns on Wednesday, with Italy, Spain, and the UK introducing new measures in the past two weeks.The initial outbreak that hit Western Europe in March and April had subsided by the summer, but as autumn arrived, so has a second wave of infections.
During the crisis, the federal government launched aid and credit programs worth billions in order to cushion the consequences of the corona crisis for the economy. More than 80 companies have already expressed interest in help from the so-called Economic Stabilization Fund (WSF), as can be seen from documents for the Bundestag Economic Committee. Five applications have been approved so far - with a volume of 6.58 billion euros. According to FDP economic politician Karsten Klein, the "government bazooka" has a massive load jam: "Of the 50 billion euros in immediate and bridging aid, only 20 billion will reach those in need by the end of the year. That is only 40 percent."
The federal government expects GDP growth of 4.4 percent in 2021. The forecast is subject to the proviso that the pandemic is under control, said CDU politician Altmaier. It will continue to weigh on the economy well into 2021. "It's a difficult time."
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How much the Corona crisis has thrown the economy back, shows a second look at the growth figure from the summer, which ostensibly as a "dream result", as KfW chief economist Fritzi Köhler-Geib says: "The historic growth surge is little more than a mechanical counter-reaction on the previous even deeper slump. " Commerzbank chief economist Jörg Krämer points out that the economy has made up almost two thirds of the corona-related slump: "That would have been a wonderful step forward for the fourth quarter. But we can be happy because of the second corona wave and the recent lockdown if economic growth does not fall below zero in the fourth quarter. "
In France, too, where the coronavirus crisis has already severely restricted public life, the economic outlook is darkening again. In the summer, the country had even stronger growth than Germany at 18.2 percent. Now the pendulum threatens to swing in the other direction again: According to the central bank, gross domestic product is likely to shrink in the current quarter. The southern countries Spain and Italy, which shone in the summer with similarly strong growth rates in the double-digit percentage range, have to prepare for a gloomy autumn economically.
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