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Container handling in the port of Hamburg: After the slump in spring, exports are rising again
Photo: Christian Charisius / dpa
The corona crisis is causing Germany's economy to shrink more than it has for years.
In their autumn report for the Federal Ministry of Economics, the five commissioned research institutes predict a decline in gross domestic product of 5.4 percent for 2020.
In doing so, they revise the forecast of their own spring report from April of minus 4.2 percent by 1.2 percentage points downwards.
In the meantime, however, many economists had assumed a far greater slump.
For 2021, the institutes are now expecting economic output to grow by 4.7 percent - in the spring they had forecast an increase of 5.8 percent.
The pre-crisis level will probably not be reached until the end of next year.
In 2022, the gross domestic product will then increase by 2.7 percent.
The reason for the more pessimistic assessment compared to the April report is that the institutes now estimate the future recovery process to be somewhat weaker.
"A good part of the slump from the spring has already been made up, but the remaining catching-up process represents the more arduous journey back to normality," said Stefan Kooths, economic director of the Kiel Institute for the World Economy.
Exports and economic stimulus programs are largely responsible for the recovery
The recovery will be slowed on the one hand by those industries that are particularly dependent on social contacts, such as restaurants and tourism, the event industry or air traffic.
"This part of the German economy will suffer from the corona pandemic for a long time and will only participate in the recovery process when measures to protect against infection are largely omitted, which we do not expect until the next half of the summer," said Kooths.
In addition, many companies are reluctant to invest.
Nevertheless, the economy is developing better again than had been expected in the meantime.
At the height of the first corona wave, many economists had temporarily predicted a minus of nine or ten percent for 2020.
Since then, however, the recovery has been better than expected.
It is largely due, among other things, to exports, which slumped particularly drastically in the course of the crisis.
In addition, the state economic stimulus programs or aid measures contributed to the fact that the disposable income of private households remained relatively stable overall, even in the acute crisis phase, write the institutes.
At the same time, this means that the general public budget will close the current year with a record deficit of 183 billion euros.
Pandemic continues to create uncertainty
The labor market is also under pressure.
Despite massive short-time work, an estimated 820,000 jobs were lost by the middle of the year, according to the autumn report.
The unemployment rate is expected to rise to 5.9 percent this year and next and decrease slightly to 5.5 percent in 2022.
The authors write that the greatest risk to the forecast remains the uncertain course of the pandemic.
They assume that the measures to protect against infection can be reduced in the course of the coming summer half-year to such an extent that they no longer significantly impair economic activity.
It is also uncertain to what extent corporate insolvencies will still occur.
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