Germany Economic Outlook
June 30, 2020The 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 GrowthGDP 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 Economic News
July 30, 2020
In the second quarter, the economy contracted at the steepest pace since at least 1970, when quarterly calculations were first recorded.
July 27, 2020
Business confidence rose to 90.5 in July from June's 86.3.
July 24, 2020
Private-sector business conditions in Germany improved markedly at the outset of the third quarter, with the IHS Markit composite Purchasing Managers’ Index (PMI) coming in at a near two-year high of 55.5 in July (June: 47.0).
July 23, 2020
Consumer confidence in Germany is expected to continue recovering in August, despite remaining pessimistic: The forward-looking GfK Consumer Climate Index is projected to rise from July’s minus 9.4 to minus 0.3—the highest level since the health crisis and in part due to the reduction in VAT. The projected improvement reflected rosier backward-looking data for July, which is released at the same time and underpins the August estimate.
July 16, 2020
Harmonized consumer prices increased 0.66% over the last month in June, following flatlining in May.