Europe’s biggest economy looks set to slowly emerge from the coronavirus pandemic from the third quarter of this year, according to Germany’s Ifo Institute for Economic Research.
The pandemic and the measures taken to control the outbreak have plunged the German economy into the deepest recession in its post-war history.
The Munich-based economic think tank said on Wednesday that economic output dropped by over 2% in the first quarter and nearly 12% percent in the second quarter — when commercial and social life were at a near-standstill due to nationwide lockdown.
However, the Institute expects output to grow by 6.9% in the third and 3.8% in the final quarter of 2020.
“From now on things will gradually go up again,” said Ifo economic director Timo Wollmershäuser, noting that there is still much uncertainty around how the pandemic will play out during the rest of the year.
“The strong [growth] rates in the second half of the year can be explained by the low production of goods and services during the shutdown of the economy — these measures have been relaxed or lifted for some sectors of the economy.”
Overall, however, the Ifo expects economic output will shrink by 6.7 % this year compared to 2019, and that it will not recover to the same level as last year until the end of 2021. Annual GDP in 2020 is expected to grow by 6.4%.
Exports, the backbone of the German economy, are expected to fall by more than 13% in 2020, while imports shrink by just under 8%, but 2021 should see exports ramping up again, by 13.4%.
The Ifo expects the number of unemployed will increase from 2.3 million in 2019 to an annual average of 2.7 million in 2020. Today, the federal employment office reported that some 2.8 million people registered as unemployed in the month of June.