Germany upgrades growth forecast to reflect ‘V-shaped’ recovery
The German economy will shrink by less than initially expected this year and GDP will recover its pre-coronavirus size by the start of 2022, the country’s government predicted today.
Economy minister Peter Altmaier said the government now predicted the economy would shrink by 5.8 per cent this year, compared to a previous estimate of 6.3 per cent.
It revised downward its 2021 forecast to growth of 4.4 per cent from a previous prediction of 5.2 per cent.
If correct, the forecast means the German economy – the biggest in Europe – would recover its pre-Covid size at the start of 2022.
“Overall, we can say that at least for now, we are dealing with a V-shaped development,” Altmaier told reporters at a press conference. A V-shaped recovery features a sharp drop in output followed by a quick rebound.
German economy to beat rest of Europe
The new forecasts suggest Germany will weather the coronavirus crisis better than most of Europe.
The European Commission predicted in July that France’s economy would shrink by 10.6 per cent in 2020. It forecast that Italian GDP would shrink by 11.2 per cent, Spanish by 10.9 per cent and British by 9.7 per cent.
Germany has dealt with coronavirus better than many of its neighbours, which goes some way to explaining its better economic performance.
It has suffered 9,300 deaths, compared to 35,500 deaths in Italy, 30,600 in France and 29,100 in Spain.
Altmaier today said the government managed to limit the impact of coronavirus on the economy with a strong state response. He added that he does not expect another coronavirus lockdown as strict as that put in place in March and April.
Yet he also said the biggest risk to the German economy, which is heavily reliant on exporting, is from a deterioration in the world economy.