Germany experiences a recession as consumers cut back on spending: Report


According to a report by the German Institute for Economic Research (DIW Berlin), Germany‎ is in a recession. The DIW Berlin says that the German economy has now for the second time in a row undershot economic expectations. It attributes this to a marked drop in private consumption and the continuing struggle of German exporters to find buyers in foreign markets.

The experts attribute the poor performance of the German economy to a number of factors which have led to a drop in consumer spending. These include rising contraction in wages, increased job insecurity due to increasing labour market segmentation, and the uncertainty caused by the UK’s prolonged Brexit process, which is currently proving to be a drag on the country’s economy.

In an attempt to boost economic growth in the country, the German government has implemented various measures aimed at providing economic stimulus. These include expanding the KfW investment bank, increasing investment in digital infrastructure, and introducing measures to improve the business environment. The government also announced an additional €4 billion Corona-Ausbruch (COVID-19 crisis) fund to help businesses cope with the pandemic.

Despite these measures, the GDP is still expected to decline in 2020 and the economist forecast for 2021 is not very