Germany Economic Forecast

Germany Economic Outlook

May 5, 2020

The economy is expected to have contracted sharply in the first quarter due to the Covid-19 pandemic and government measures to curb the spread of the virus, which have paralyzed activity. However, the economic fallout will likely be much greater in the second quarter, despite some easing of restrictions. Business sentiment nosedived to a historic low in April, while the lockdown and disruptions to global demand and supply chains plunged the composite PMI to an all-time low in the same month. The services sector has been particularly hard hit by the containment measures. Furthermore, consumer confidence is expected to sour significantly in May on the back of deteriorating views on the economy and income, which will restrain household spending. To counteract the crisis, the government is expected to borrow significantly more than initially anticipated.

Germany Economic Growth

The economy is expected to record its worst performance in decades this year, owing to the Covid-19 pandemic and containment measures weighing heavily on the domestic and global economy. The government’s fiscal stimulus measures should cushion the fall somewhat, although a prolongation of the crisis is a key downside risk. FocusEconomics Consensus Forecast panelists project the economy to contract 5.8% in 2020, which is down 1.5 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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