Germany: A drastic 6.6% drop in GDP in 2020

  •   29/04/2020 - 14h36
  •   DEHOUI Lionel

The coronavirus pandemic has not spared Europe's leading economic power at all. Germany as of today registers 156 337 confirmed persons for 5 913 dead. However, the country is considering a gradual return and is gradually beginning to lift the restrictive measures that serve to curb the spread of the virus. It is the appearance of the primitive signs that could aggravate the situation that can be observed. The new infection rate is 1.0% at the beginning of the week.

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Germany: A drastic 6.6% drop in GDP in 2020

Further spread of the virus

In recent weeks, this rate has risen from 0.7% to 1.0. This simply means that a confirmed individual is spreading the virus and infecting an average person. While this rate must be below 1.0 to control the risk of spread. The Robert Koch Institute urges the public to limit contact and stay home as much as possible to safeguard the gains made.

 

Economic situation in 2019

This coronavirus health crisis is aggravating the economic situation in Germany, which has already been weakened by the crisis in the euro currency zone. In 2019, Germany achieved only 0.6% growth in its Gross Domestic Product (GDP) while it was 1.5% in 2018. This situation is justified by the global fall in the production of capital goods and England's exit from the euro zone. In addition, there is the restructuring of the automotive industry.

 

The 2020 Economic Forecast

This Tuesday, according to a forecast by Ifo, the German Institute for Economic Research, the country should expect a decline in its GDP in the year 2020. This decline in GDP is estimated at 6.6%. It also states that economic activity will return to its best stage after the year 2021. The German economy entered a 1.9% recession in the first quarter of 2020. The decline in Germany's GDP forecast for the second quarter of the year could reach 12.2%.

 

Germany after the Covid-19 crisis

The German economy will not return to normal so soon after deconfinement. A rather embarrassing situation for economic players in all sectors of activity. A growth of 8.5% is only envisaged for the year 2021. 30 years ago, reunified Germany experienced such a situation due to the deterioration of economic activities. The most severe fall occurred this year in April.

 

A gradual deconfinement

A relaxation of restrictive measures such as containment is allowed in Germany. Commercial activities with an area of 800 square metres are allowed to open. This relief also concerns the German car sector and the activities of cycle dealers. Retail players are asking for the favour of the State in order to start reopening on 4 May. A further discussion will be held on Thursday to consider the steps to be taken for the lifting of restrictive measures.

 

Other information

According to an International Monetary Fund estimate, Germany is expected to have a budget surplus of 1% this year and 0.7% next year. While the European Commission was forecasting 0.6% in 2020 and 0.2% for next year.