Germany Economic Forecast

Germany Economic Outlook

June 30, 2020

The economy is expected to have contracted sharply in the second quarter due to Covid-19. In April, industrial output fell at the steepest clip since at least the early 1990s, particularly on the back of weakness in the manufacturing sector amid the global lockdown weighing on foreign demand. The composite PMI, furthermore, remained in contractionary territory throughout the quarter on broad-based weakness in the private sector. Meanwhile, boding ill for household spending, the unemployment rate continued to rise in May while retail sales plummeted in April. More positively, the composite PMI rose in May and June, suggesting activity recovered somewhat towards the end of the quarter following the lifting of lockdown restrictions. In other news, the government announced fresh stimulus of EUR 130 billion in early June. Partly financed through net new borrowing, the package focuses on reducing the tax burden and further liquidity support.

Germany Economic Growth

GDP is expected to contract steeply this year due to the global health crisis and associated containment measures weighing heavily on domestic and foreign demand. On the other hand, the government’s loose fiscal stance should cushion the fall somewhat, paving the way for a strong recovery next year. A prolongation of the crisis is a key downside risk, however. FocusEconomics Consensus Forecast panelists project the economy to contract 6.1% in 2020, which is up 0.2 percentage points from last month’s projection, and to grow 4.8% in 2021.

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Germany Facts

Value Change Date
Bond Yield-0.190.41 %Jan 01
Exchange Rate1.120.65 %Dec 31

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