German economy taking hit from lockdown measures in November: ministry

The skyline with its banking district is photographed in Frankfurt
FILE PHOTO: The skyline with its banking district is photographed in Frankfurt, Germany, January 7, 2020. REUTERS/Kai Pfaffenbach

November 13, 2020

BERLIN (Reuters) – Germany’s economic recovery continued until October but has slowed since August, the Economy Ministry said on Friday, adding that lockdown measures implemented to slow the spread of the coronavirus hit the economy in November.

The Economy Ministry said in its monthly report that the restrictions imposed from the start of November which have seen restaurants, bars and entertainment venues such as cinemas and theatres close meant consumption was taking a hit.

The ministry said it did not look like the recovery would end in the fourth quarter though, as long as restrictions remain limited.

Chancellor Angela Merkel and the premiers of Germany’s states will meet on Monday to review whether the circuit-breaker measures imposed for a month on Nov. 2 have been enough to slow a steep rise in new infections.

German Health Minister Jens Spahn said on Friday it was too early to say whether the restrictions would be extended beyond November, as the number of new daily coronavirus cases in Germany hit a record of 23,542.

The German government’s council of economic advisers on Wednesday said it expected Europe’s largest economy to shrink less than initially feared this year thanks to a strong summer, but a second wave of the COVID-19 pandemic was clouding the growth outlook for 2021.

The German economy grew by a record 8.2% in the third quarter thanks to higher consumer spending and exports, but some experts say a second partial lockdown could cause the economy to contract slightly in the fourth quarter.

The ministry said the outlook for German exports remained cautiously optimistic in view of the global economic recovery.

Insolvency applications from companies in Germany dropped by 35.4% in August year-on-year, the Federal Statistics Office said on Friday, adding that the drop was mainly due to a temporary suspension of obligations to file for insolvency from March, not reflecting the hardship many companies are facing due to the pandemic.

(Reporting by Riham Alkousaa; Editing by Michelle Adair)