Germany Economic Forecast

Germany Economic Outlook

September 29, 2020

After contracting at a historic pace in the second quarter, the economy is expected to have emerged from recession in the third; however, available data points to a fragile recovery amid rising new Covid-19 cases. In July, industrial output lost traction, while retail sales fell slightly over the prior month. More positively, business confidence turned significantly less pessimistic in the quarter and private sector operating conditions improved, although they worsened in the services sector in September. Furthermore, consumer sentiment also turned markedly less sour, which, coupled with a stabilizing unemployment rate due to the short-term work scheme, should provide household consumption some respite. External demand also firmed as merchandise exports expanded for the third month running in July, albeit at a slower pace in part due to an unsupportive base effect.

Germany Economic Growth

This year, GDP should contract sharply as the Covid-19 pandemic and associated containment measures weigh heavily on foreign and domestic demand. Fiscal stimulus measures should lay the groundwork for a recovery next year, however. In 2021, the economy is forecast to rebound strongly as activity returns, although this will be partly due to a supportive base effect. FocusEconomics Consensus Forecast panelists project the economy to contract 5.8% in 2020 and to grow 4.5% in 2021, which is down 0.3 percentage points from last month’s estimate.

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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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