German companies are regaining some hope

German companies are regaining hope. Business expectations for the coming months improved significantly in May following the crash in March and April. The incipient easing of corona restrictions is evidently improving the prospects for many companies again.

However, this is not yet the all-clear. The assessment of the current business situation deteriorated even further in May. The crisis is therefore still far from over. But at least the first glimmers of hope are emerging in the battered service and retail sectors.

Meanwhile, a deep slump in overall economic output is expected for the second quarter. In the first three months of 2020, gross domestic product had already slumped by 2.2 percent. And this despite the fact that the corona pandemic did not yet have a significant impact on economic output in January and February, and the most severe restrictions did not take effect until mid-March.

According to current reports, private consumer spending in Q1 was 3.2 percent lower than in the previous quarter on an adjusted basis. Investments in equipment – i.e. primarily in machinery, appliances and vehicles – even declined by 6.9 percent. Exports of goods fell by four percent. Construction investments and government consumer spending had a stabilizing effect. They prevented an even sharper decline in gross domestic product.

All in all, it is certainly to be expected that the gradual lifting of the lockdown and the beginning of the opening of the market, at least in some sectors, will gradually improve the mood in the coming months. However, there is still no sign of a rapid recovery. The crisis will probably continue to accompany us at least into the autumn, perhaps even longer.

Translated with (free version)

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