Industrial production in the euro area’s two largest economies cratered in March, highlighting the crippling impact of just half a month of factory closures to control the spread of the deadly coronavirus.
A 9.2% decline in output in Germany and a 16.2% drop in France are the latest signs of the severity of Europe’s slump. The warning from industry comes a day after the government in Germany eased some restrictions and assured it’s working on a plan to restart the economy.
In France, where the government will provide more details on how it will unwind containment measures, there has been little improvement in business activity in April. According to statistics agency Insee, the economy is running 33% below normal levels, only a slight improvement from the 36% recorded at the start of the lockdown.
The European Commission has offered a dire outlook for the year. Forecasts showed the euro area is facing its worst recession in its history, with Germany’s economy shrinking 6.5% despite generous support for companies and households.
There’s a large risk though that reality could turn out to be worse. BMW AG followed other carmakers in lowering its profit outlook for the year, and warned it will have
difficulty generating cash. Lufthansa is negotiating a multibillion-euro bailout with the government.
German manufacturing fared particularly badly in March with a drop in output of more than 11%. The Economy Ministry said to expect the slump to deepen, after factory orders declined nearly 16%.
output sank 18.2% in March.