ECONOMIC OUTLOOK FOR 2020 AND 2021
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(PR) The German Council of Economic Experts (GCEE) already published a special report on the coronavirus pandemic in March 2020, in which the GCEE presented scenarios for the further economic development. Today, the GCEE is presenting its updated economic outlook, as the available economic data now allows a better assessment of the economic situation in 2020.
The development of the German economy is likely to be relatively close to the risk scenario described in the Special Report as a "pronounced V". However, the trough will likely be lower than expected therein. The GCEE forecasts the real gross domestic product (GDP) to decline by 6.5 % in 2020 (6.9 % calendar-adjusted). For 2021, it expects positive growth rates of 4.9 % (also 4.9 % calendar-adjusted). Consequently, GDP is unlikely to return to its pre-pandemic level before 2022. The unemployment rate will continue to rise in the coming months and will only start to decline in the course of 2021.
The weak external environment will put a significant burden on German exports this year. The global spread of the coronavirus has led to a deep recession of the world economy. For the euro area, the GCEE expects real GDP to decline by 8.5 % in 2020 and grow again by 6.2 % in 2021.
Worldwide, the pandemic has spread more strongly than initially expected and more extensive containment measures have been taken, some of which are still in place. However, the reduction in the number of new infections and the gradual easing of health policy interventions in Germany and of important trading partners will create the basis for a recovery later this year. In addition, the adopted stabilisation measures and economic policy stimuli are expected to have a positive effect.
The outlook for the further economic development remains subject to considerable uncertainty. In particular, the course of the pandemic is of major importance. A significantly longer phase of weak economic development is expected, if the number of new infections cannot be kept at low levels, for example by smart distancing, if the easing of public health interventions does not continue and if uncertainty of companies and households is not reduced.
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