BERLIN (Reuters) - Orders for German industrial goods fell 25.8% in April, suffering their biggest drop since records began in 1991, but the low point has probably passed for the backbone of Europe’s largest economy, the Economy Ministry said on Friday.
Official figures showed that domestic orders dropped 22.3% while orders from abroad were down 28.1%. Analysts polled by Reuters had expected a 19.7% fall in orders overall.
“In view of the gradual easing (in coronavirus restrictions), however, the low point of the industrial recession should now have passed,” the ministry said in a statement.
Germany is facing the prospect of its deepest recession since World War Two, even though a lockdown that had shuttered shops, businesses and factories is now being eased.
The national central bank, the Bundesbank, said the economy will shrink significantly this year and may need two years to make up the lost ground.
The economy will contract by 7.1% in 2020 based on calendar- adjusted figures and 6.8% according to unadjusted data, the Bundesbank said in its biannual projections.
A survey by the economic institute Ifo published on Friday indicated that half of German companies had postponed investments in May while 28% cancelled investment projects completely as the coronavirus pandemic takes its toll.
“These are worrying figures for the long-term development of the economy,” said Klaus Wohlrabe, Ifo’s head of surveys.
Chancellor Angela Merkel’s government has tried to mitigate the impact of the crisis with a range of steps, including a 130 billion euro ($148 billion) stimulus package agreed on Wednesday to speed up recovery.
“Public finances make a significant contribution to stabilisation,” Bundesbank President Jens Weidmann said.
“New stimulus is appropriate in the current situation and I view the government’s economic stimulus programme favourably.”
Economy Minister Peter Altmaier told Focus Online magazine that Germany should return to a balanced budget in the next legislative period.
On Thursday, Altmaier said the new economic package would be the biggest since the Federal Republic of Germany was founded in 1949.
“The economy has not yet bottomed out,” he added. “In the coming weeks and months we will experience difficult moments together. There is light at the end of the tunnel.”
Altmaier said he was aiming for a return to growth in the second half of this year, and for the economy to regain pre-crisis levels “in the second half of 2022 at the latest”.
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Writing by Paul Carrel; Editing by Michelle Martin and Kevin Liffey