The figures were staggering, as Germany, Europe’s largest economy, Thursday revealed a historical 10.1 percent drop in its gross domestic product in the second quarter, while Mexico posted a 17.3 percent decline, the highest in its history.
Economic growth towards deflation
Meanwhile, US gross domestic product during the same period fell almost 32.9 percent. It is the second consecutive three-month period in which the world’s largest economy is contracting, which means it is entering a recession, according to preliminary estimates published by the US Department of Commerce Thursday.
But it is worth careful in comparison, as it records The Americans Evolution at an annual rate that compares GDP to the previous quarter of the same year, and displays progress throughout the year on the basis of this rate, and then tends to amplify differences. As for the second quarter of 2019, the decrease was 9.5%.
“GDP is the rearview mirror, it shows us the bottom of the curve, the black hole of the crisis,” Ludovic Sopran, chief economist at Allianz, told AFP.
In addition to the severe recession in the United States, requests for benefits increased The unemployment New weekly to 1.43 million last week in the whole country.
In a series of results published Thursday, the major economies of the “old world” emerged in a shaky image, while Apple, Facebook, Amazon and Alphabet, the giants of American technology, are expected to publish their quarterly reports within hours.
Oil companies have devalued their assets with the ongoing collapse in prices The oil Crude and the historical decline in demand, with huge losses in the second quarter of $ 8.4 billion for Total and $ 18.1 billion for Shell, the Anglo-Dutch company.
“Unprecedented” but it will not last
The aviation industry is also paying a heavy price for the crisis, while air traffic is not expected to return to normal before 2023.
On Thursday, European aircraft maker Airbus announced a net loss of 1.9 billion euros in the first half of the year: it used 12.4 billion euros of its cash reserves during the first six months of the year and reduced its production rates by 40 percent.
Its major competitor, Boeing, plans to cut production cuts, lay off more employees and halt production of the legendary Jumbo 747 in 2022. In the second quarter, it lost a total of $ 2.4 billion.
The auto industry was also disrupted with the closing of factories and car dealerships during the isolation period.
The French company Renault in the first half of the year recorded the largest net loss in its history, amounting to 7.3 billion euros, affected by its Japanese partner Nissan and the decline in shares. At the end of May, it had announced the removal of 15,000 jobs.
The company announced Volkswagen The German giant reported a pre-tax loss of 1.4 billion euros in the first half.
In the field of rail transportation, the rail company announced French About a loss of 2.4 billion euros, while Deutsche Bahn, Germany is experiencing the worst crisis in its history, with losses of 3.7 billion euros.
Renault CEO Luca de Meo eased the burden of the crisis by saying that “the situation is unprecedented, but it will not last,” expecting the market to recover, but in what way? Return to normal is expected to be slow, and the automotive sector, such as air transport, is subject to increasing environmental pressure.
In Germany, economists expect a rapid recovery after a glut. “The German economy has already recovered,” said Karsten Bergsky, economist at ING Bank.
In the industrial sector, large companies also revealed a dismal outcome, with steelmaker Arcelumital reporting a net loss of $ 559 million in the second quarter.
The food industry showed slightly better resistance. The Swiss giant, Nestle, posted a half-year net profit of 18.3 percent, under the influence of sales. The few good news came from the technology and pharmaceutical sectors.
Samsung scored South Korean The global leader in mobile phones and memory cards, increased its quarterly net profit by 7.3 percent, and the Japanese increased Hitachi from their annual sales target.
There are companies that registered improvement such as the American “UPS” for shipping, benefiting from the increase in the number of packages required, or Proctel & Gamble, benefiting from the increasing demand for cleaning products.
Whereas, the French Drug Laboratory Ibsen achieved half-year net profit, up slightly by 1 percent, for example.
“This crisis is totally Darwinism,” Supran warned. “It affects countries and sectors very differently.” After the shock of the first stalling activity, “the sectors that are already weak in terms of profitability will have to adapt to a slow change in the business environment.”
He said, “Some companies will not stand up: Either they change their business model very quickly, and this requires investment, or they will disappear slowly but surely, because their model will no longer be appropriate to the change in consumption” and the priorities of governments.
On the contrary, he added, “this crisis revealed real drivers of growth represented in the knowledge and know-how economy and the digital economy” and selling via the Internet, but “we are talking about a few companies.”