EXPERTS on Tuesday agreed that crisis 2020 would cause the German economy to drastically shrink, but a forecast released by one leading industry body went far beyond the government’s own already-bleak estimate.
The outlook also foresees a heavy blow to Germany’s export-focused economy as demand falls, with exports forecast to plunge by 15 per cent.
The current situation was a hallmark of a country whose economy was in crisis.
The current government estimate is of a 6.3-per-cent decline in Gross Domestic Product (GDP), for Europe’s largest economy in 2020, already the worst recession seen in the country’s post-war history.
According to the Federal Statistical Office (Destatis), Germany officially entered a recession in the first quarter, when its GDP contracted by 2.2 per cent compared to the previous three months.
However, it was expected that the economy would pick up again in 2021, though not at the rate needed to recover the previous year’s losses, with 5-per-cent growth forecast.
Meanwhile, there was at least some indications of improvement on Tuesday, as sweeping anti-coronavirus closures and restrictions put in place in mid-March had been gradually lifted in recent weeks due to falling infection numbers.
The ZEW institute reported an improvement for the second month running in its economic sentiment indicator, based on a survey of financial market experts regarding their six-month expectations.
The index continued to recover in May, going up by 22.8 points to 51, after a collapse in the economists’ outlook in March.
Their assessment of the current situation remained gloomy, although that indicator only slightly fell by 2 points to minus 93.5.
According to the ZEW President, Achim Wambach, optimism is growing that there will be an economic turnaround from summer onwards.
“The catching-up process will take a long time. Only in 2022 will economic output return to the level of 2019,” he said.
– May 19, 2020 @ 17:20 GMT /