Xinhua
31 Oct 2020, 00:48 GMT+10
by Lukas Heiwolt
BERLIN, Oct. 30 (Xinhua) -- Germany's gross domestic product (GDP) rose by 8.2 percent in the third quarter (Q3) compared to the previous quarter, the Federal Statistical Office (Destatis) said on Friday.
Although the German economy shrank by 4.3 percent in Q3 year-on-year, the quarterly increase was still notable in light of the "historic slump" in the second quarter caused by the COVID-19 pandemic, Destatis noted.
The recovery of the economy during the summer was mainly driven by consumer spending, investments in machinery and equipment as well as a "sharp increase in exports," according to Destatis. EXPORTS SUPPORT INDUSTRY
Following losses of more than a billion euros (1.16 billion U.S. dollars) in the first half of the year, Germany's largest carmaker Volkswagen saw growing sales again in Europe and China and announced earnings before tax of around 2.4 billion euros by the end of Q3.
Although Volkswagen's global sales during the first three quarters of 2020 were still down 18.7 percent year-on-year, deliveries in Q3 reached pre-crisis levels again. According to Volkswagen, its largest single market, China, has been a "key driver" of market recovery.
German plastics manufacturer Covestro also recorded a strong increase in net income in Q3 and posted a year-on-year growth of almost 22 percent as the company's measures in response to COVID-19 were now paying off.
Just like with Volkswagen, China also played a major role in the recovery in Covestro's sales. "China is the only relevant, large automotive market that has not only proven to be robust in recent weeks and months, but also showed significant growth over the previous year," Markus Steilemann, chief executive officer (CEO) of Covestro, told Xinhua recently. STATE AID
Like most European countries, Germany is currently hit by the second wave of the pandemic. On Wednesday, German Chancellor Angela Merkel and the minister presidents of the country's federal states agreed on tougher contact restrictions and a limited lockdown during the month of November.
In order to support companies whose operations were closed due to the upcoming lockdown, the government decided to provide additional economic aid to the tune of 10 billion euros. Depending on their size, the affected companies receive up to 75 percent of lost revenues compared to pre-crisis levels.
As part of the major COVID-19 stimulus package worth 130 billion euros that was unveiled in June, the government has already introduced quick loans for struggling companies via the state-owned development bank KfW and suspended the obligation to file for insolvency.
However, there is a risk that recovery supported by state aid is not sustainable. According to an expert survey published by the Munich-based ifo Institute for Economic Research last week, an overwhelming majority of economists fear that the suspension of the insolvency rules creates "zombie companies" -- businesses that are economically unviable yet still operating.
Almost all economists surveyed by ifo expect the number of business insolvencies in Germany to increase again as soon as companies are required to file for insolvency again when the economic policy measures come to an end. FULL-YEAR OUTLOOK
On Friday, Germany's Minister for Economic Affairs and Energy Peter Altmaier stressed that the economic downturn was "less drastic than initially feared" because the country had acted "jointly and decisively during the first wave of the pandemic."
Despite the renewed increase in new COVID-19 infections, the catching up process of the German economy that was achieved in Q3 would continue at a very slow pace in the coming winter months, according to Altmaier's ministry.
For the full year 2020, the government projected a price-adjusted decline in GDP of 5.5 percent before growing again by 4.4 percent in 2021. However, the ministry warned that the forecast depends strongly on how the infection spreads. (1 euro = 1.16 U.S. dollars)
Get a daily dose of Iraq Sun news through our daily email, its complimentary and keeps you fully up to date with world and business news as well.
Publish news of your business, community or sports group, personnel appointments, major event and more by submitting a news release to Iraq Sun.
More InformationCULVER CITY, California: TikTok is preparing to roll out a separate version of its app for U.S. users, as efforts to secure a sale...
WASHINGTON, D.C.: President Donald Trump claimed he was unaware that the term shylock is regarded as antisemitic when he used it in...
PARIS, France: A strike by French air traffic controllers demanding improved working conditions caused significant disruptions during...
OMAHA, Nebraska: With Congress considering cuts totaling around US$1 trillion to Medicaid over the next decade, concerns are rising...
ROME, Italy: Quick thinking by emergency responders helped prevent greater devastation after a gas station explosion in southeastern...
WASHINGTON, D.C.: President Donald Trump is drawing praise from his core supporters after halting key arms shipments to Ukraine, a...
DUBAI, U.A.E.: Saudi Aramco is exploring asset sales as part of a broader push to unlock capital, with gas-fired power plants among...
CAIRO, Egypt: This week, both Hamas and Israel shared their views ahead of expected peace talks about a new U.S.-backed ceasefire plan....
WASHINGTON, D.C.: President Donald Trump will meet Israeli Prime Minister Benjamin Netanyahu at the White House on Monday. President...
GENEVA, Switzerland: A new United Nations report alleges that dozens of global corporations are profiting from and helping sustain...
ABU DHABI, 8th July, 2025 (WAM) -- Andrey Slepnev, Minister in charge of Trade at the Eurasian Economic Commission, affirmed that the...
Issues facing the Global South will get priority under Indias chairmanship of the grouping India intends to define BRICS in a new...