GERMANY, long averse to being in the red, today posted a public deficit of €51.6 billion (RM251.5 billion) for the first half of this year, with coronavirus lockdowns undercutting government revenue as it increased spending.

The economy posted a deficit of 3.2% of gross domestic product in the six months to June, according to Germany’s statistics agency Destatis, above the 3.0% limit under EU rules that Brussels suspended due to the pandemic. 

In the same period last year, Germany recorded a public surplus of 2.7% of GDP, or around €46.5 billion. 

Destatis revised upwards the GDP estimate for the three months to the end of June to show a contraction of 9.7%, better than the initially reported 10.1% slump. 

It is still “the sharpest decline since quarterly GDP calculations for Germany began in 1970,” the agency said, worse than at the height of the financial crash, when GDP fell 4.7% in the first quarter of 2009.

For the first time since 2010, state revenue was down year-on-year, Destatis said, while government spending soared 9.3% as it tried to support the economy.

Last week, Finance Minister Olaf Scholz said Germany will take on yet more debt in 2021 to lessen the impact of the pandemic, forcing it to suspend its cherished policy of keeping a balanced budget. 

Scholz previously said Germany planned to borrow around €218 billion this year to help pay for a huge rescue package to steer the country through the coronavirus-induced downturn. – AFP, August 25, 2020.