After the slump in 2020, the signs are good that the German economy will grow again this year. According to Minister for Economic Affairs Altmaier, there should not be a second economic stimulus package.
Dhe German economy was lucky in adversity. In the crisis year 2020, the gross domestic product (GDP) lost 5 percent of its economic power compared to the previous year due to the measures to contain the corona pandemic, closed borders and supply chain interruptions. The Federal Statistical Office announced on Thursday. In the first weeks of the crisis, leading economic research institutes had expected a minus of well over 10 percent.
The fact that this did not happen is primarily due to the strong recovery in the third quarter. After a GDP slump in the second quarter of 9.8 percent compared to the previous quarter, it went up again by 8.5 percent between June and September. “Freed from the shackles of lockdown, economic life exploded from May onwards and brought phenomenal growth to the German economy in the third quarter. That alone was enough to avoid a slump like the one in the global financial crisis, ”commented the economist Andreas Scheuerle from Dekabank.
This experience gives hope that things could quickly improve again even after the new lockdown, the statisticians said when presenting the results. Even if the restrictions last until spring, a strong countermovement, driven by private consumption, can be expected as soon as the measures are relaxed, given the historically high savings rate of 16.3 percent.
China is contributing to the recovery
For now, however, there is likely to be a setback for the economy. Although only a few December data are available so far, the Federal Statistical Office expects the economy to stagnate in the final quarter of 2020. “What is clear, however, is that the recovery process in the German economy has been interrupted as a result of the second wave of infections. For the start of the current year there are even signs of declining economic activity, ”said Stefan Kooths, Director of the Research Center for Business Cycle and Growth at the Kiel Institute for the World Economy (IfW).
Unlike until mid-December, the lockdown is now also affecting stationary retail. The economy is currently being supported primarily by industry, which is continuing its catching-up process despite the lockdown. In contrast to the first lockdown in spring, production and exports are not affected by border closings. In particular, the strong demand from China is contributing to the recovery.
For the year as a whole, economists continue to expect a plus. How high this will be, however, there is disagreement. Of the leading economic research institutes, the IfW is the most pessimistic. It expects economic output to grow by 3.1 percent compared to the previous year. The RWI Leibniz Institute for Economic Research in Essen, however, expects GDP to rise by 4.9 percent.
Economics Minister Peter Altmaier (CDU) also expects an upturn this year. He is convinced that the “growth will be clear and noticeable,” as he announced on Thursday. However, growth will not be as strong as expected in autumn. At that time, the federal government had forecast an increase of 4.4 percent for 2021 compared to the previous year. The current lockdown could not prevent the recovery, but it could delay it, said Altmaier.
The Minister of Economic Affairs does not consider a second economic stimulus program to be necessary – despite the increasingly long lockdown in the Corona crisis. The government launched a 130 billion euro package in 2020, some of which would not take effect until 2021, Altmaier said on Thursday in Berlin. “That’s why I believe that the classic type of economic stimulus programs we did last year are not the order of the day at the moment.”