"Economy in shock" - that is the title of the spring report of leading economic research institutes. Fiscal policy is against it. But the consequences of the corona crisis are felt by millions of citizens.
Berlin (dpa) - According to a forecast by leading economic research institutes, the severe economic consequences of the corona crisis will leave significant traces on the labor market.
The institute's spring report shows that the unemployment rate will skyrocket to 5.9 percent and the number of short-time workers to 2.4 million. It will be presented on Wednesday and was previously available to the German Press Agency.
According to this, the average number of unemployed will increase by almost a quarter million to 2.5 million compared to the previous year. The recession will also have an impact on household disposable income, which will decrease this year for the first time since the global financial and economic crisis in 2008/09.
The economy in Germany is slumping as a result of the corona pandemic, the report says. To slow down the wave of infections, the state has severely restricted economic activity in Germany. Therefore, the gross domestic product should shrink by 4.2 percent this year.
In the first quarter of 2020, the gross domestic product (GDP) should have shrunk by 1.9 percent compared to the previous quarter, the institutes expect. The Federal Statistical Office plans to present the first estimate for the first quarter on May 15. According to the expert report, it then falls in the second quarter as a result of the "shutdown" by 9.8 percent. This is the largest decline in Germany ever recorded since the beginning of the quarterly accounts in 1970 and more than twice as large as that during the global financial crisis in the first quarter of 2009. The institutes predict a recovery and growth of 5.8 percent for the coming year . According to the report, the recovery could already start in the third and fourth quarters of 2020 with GDP growth of 8.5 and 3.1 respectively in the previous quarter.
It is also said that both wages and income from self-employment and assets will decrease in the current year. This is countered by the accelerated increase in monetary social benefits due to rising short-time work and unemployment. The purchasing power of private households will be supported in the current year by the lower price inflation, which results above all from the drop in crude oil prices. According to the expert opinion, consumer prices will only increase by 0.6 percent this year.
However, there are significant downside risks associated with the forecast, for example because the pandemic can be weakened much more slowly - or because economic activity is less successful than expected or a new wave of contagion is triggered.
The institutes ifo, DIW Berlin, IfW Kiel, RWI Essen and IW Halle are involved in the joint diagnosis. In their report, they are therefore slightly more optimistic than Federal Minister of Economics Peter Altmaier (CDU), but more pessimistic than "economic practices".
Altmaier recently said that economic growth cuts would be at least as strong, if not more, than in the financial crisis in 2009. At that time, gross domestic product (GDP) had declined by 5.7 percent. In a special report at the end of March, the "economic practices" assumed a five-week shutdown and a subsequent short recovery phase as the most likely scenario at the moment. In this case, Germany's gross domestic product would shrink by 2.8 percent in 2020 and then grow again by 3.7 percent the following year.