Federal government expects GDP to decline by 5.5 percent

According to the federal government, German economic output is likely to decline sharply this year. According to the government’s forecast, however, not as bad as in the financial crisis.

Winter will be a new challenge for the German economy.

BAnd economics minister Peter Altmaier is raising the economic forecast for the current year slightly, despite the extensive restrictions that have just been decided in November. As the Ministry of Economic Affairs announced in Berlin on Friday, a decline in gross domestic product (GDP) of 5.5 percent is expected in Germany.

At the beginning of September, the Ministry of Economic Affairs had predicted a minus of 5.8 percent. At the end of April, Germany’s GDP was expected to fall by 6.3 percent.

Finance Minister Olaf Scholz (SPD) sees reason for confidence in the government’s current economic forecast. “We are in a much better position this year than we feared in the spring,” said the Vice Chancellor on Friday. This applies despite the contact restrictions that are now necessary again. “The fact that we reacted promptly and powerfully pays off,” emphasized Scholz. He promised: “We will do everything we can to break the infection dynamics, to protect lives and our economy.”

More than 4 percent growth next year

However, the Ministry of Economics said: “Only if we manage to flatten the curve of new infections again can the recovery process of our economy continue and serious damage to companies and employees prevented.”

The federal and state governments decided on Wednesday the toughest measures since the restrictions in the spring. From Monday, restaurants, cinemas and theaters, among other things, will close for the entire month of November. During this time, only a few people are allowed to meet privately and in public. Hotels are no longer allowed to accept tourists.

In the meantime, the German economy recovered significantly in the summer. Economic output rose by 8.2 percent between July and September compared to the previous quarter, as the Federal Statistical Office announced on Friday. Economists surveyed previously had expected an average increase of 7.3 percent.

“It is a time to hold your breath: the historic economic slump was followed by a historic recovery in the third quarter,” said Andreas Scheuerle from Dekabank, but he added: “But it was mostly a technical reaction: the deeper you put a ball under water presses, the higher he jumps out of it. That also applies to the economy. “

Once the capacity utilization improved, the recovery slowed down, but continued with the support of extensive economic measures, the Ministry of Economic Affairs announced. At the same time it was said: “The economic recovery stands and falls with the further development of the infection process.”

For the coming year 2021 Altmaier expects an increase in the gross domestic product of 4.4 percent, for the year 2022 with 2.5 percent. The pre-crisis level would therefore be reached again at the turn of the year 2021/2022 at the earliest.