What's going on?

Germany could�ve sworn this thing used to be bigger: fresh data out on Friday showed its economy shrank at its fastest pace since the 2008 financial crisis last quarter.

What does this mean?

Germany was having a rough time even before coronavirus showed up. Its economy barely grew at all in the last nine months of 2019, as the US-China trade war, trouble in the auto sector, and Brexit uncertainty all took their toll on its crucial manufacturing sector. And now it�s shrunk 2.2% in the first quarter of 2020 � its second consecutive quarter of economic decline, officially pushing the country into recession territory.

With lockdown restrictions only slowly being lifted, Germany�s economy is set to suffer even more this quarter. Still, it�s in a better position than some: Spain, Italy, and France all saw their economies shrink by more than 4% last quarter (tweet this). Germany�s lighter lockdown measures could be one explanation, or maybe it�s down to the country�s reliance on manufacturing and trade � sectors that are holding up better than the services and tourism sectors that dominate Europe�s south.

Why should I care?

For markets: Withdrawing markets.
Germany�s recession is having a knock-on effect on its eastern European neighbors, most of which are classified as emerging markets. The region was the bloc�s fastest-growing until recently, but now � because those countries� supply chains are so tightly linked with Germany�s � it�s on track for its worst recession since the fall of the Soviet Union.

The bigger picture: Luft in the lurch.
The German government has already mobilized over a trillion dollars to help support its businesses in response to the crisis, and airline Lufthansa is trying to get a piece of the action by negotiating a $10 billion bailout. And at least one minister is fighting its corner, saying the government should protect the company against a potential takeover from a foreign competitor that might try to take advantage of its vulnerable situation.