The export-reliant economy, Germany, is showing the pain of weak global demand as industrial production and factory orders increased not as much as expected in May, discouraged by slow weak demand from outside Euro-currency countries. The number indicated the need for German government support around €1.3 trillion, the biggest in European Union by far, targeting to support the recovery from the downturn caused by the Coronavirus pandemic.
The overseas shipment accounted for around 47% of last year GDP, and Germany must endure that the country’s economic recovery is not relying only upon its own. Many trading partners have launched monetary and fiscal stimulus to boost recovery and growth, and as the focus is on the recovery, many do not have much room to spend as long as the virus still spreading so the country’s exports might still hurt for a long time.
German’s economy is expected to shrink 6.3% this year and rebound 5.3% in 2021 as projected by the European Commission. The projection accentuating downside risks in a more lengthy international depressed and declining export demand.
France showing more promising early signs of recovery were only had less than one-third of exports making up the economy. Economic activity in June was only 9% less than the normal level, smaller than previously anticipated and the purchasing manager survey already indicating expansion.
While German worker that has been dismissed in the transport, retail and hospitality sectors started to return into their jobs, manufacturing sectors is still sending the workers home. Around 2.3 million employees affected in this sector, around 33% in equivalent, are a receiver of state wage support in June. 678,000 workers lost the jobs permanently in the Q2, and the numbers keep rising with laid-off plans from a few major manufacturers. Airbus is rumoured to be shedding around 15,000 jobs while carmaker Daimler had said the auto industry also will go through hurtful cutbacks.
