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Cost of lockdown: German industrial output suffers record plunge

Cost of lockdown: German industrial output suffers record plunge
The German economy has been hit hard by coronavirus restrictions as the nation’s industrial output posted its steepest plunge on record in April.

Production nosedived 17.9 percent compared to the previous month, while the year-on-year drop was as much 25.3 percent, official data released on Monday showed. According to the Federal Statistical Office, industrial output has faced “its biggest drop” since this data was first recorded in January 1991.

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While the sharp drop was mostly expected, analysts earlier predicted that it would not exceed 16 percent in April. 

The country’s key auto industry was hit hardest, as it saw a decline of over 74 percent. Another stronghold of the German industry, the construction sector, contracted by over four percent in April. 

Germany started to introduce measures to battle the spread of the deadly virus in the second half of March, when production slumped almost nine percent. However, the restrictions, which have forced most businesses to close, took their toll on a full scale in April, the Federal Ministry for Economic Affairs and Energy noted.

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The good news is that the “low point” has been reached, according to the ministry. “With the gradual easing of protective measures and the resumption of production in the automotive industry, the economic recovery is beginning now,” it said in a statement.

Meanwhile, one of the largest German think tanks, the Ifo Institute, expects national industry to decline further in the coming three months, albeit at a slower rate. The agency said that its index for production expectations rose to -20.4 points in May from -51.0 points in April, making it the biggest month-on-month increase in the index since German reunification.

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