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IW-Forschungsgruppe Gesamtwirtschaftliche Analysen und Konjunktur / Hubertus Bardt / Markus Demary / Michael Grömling / Tobias Hentze / Michael Hüther / Galina Kolev / Holger Schäfer IW-Report No. 46 14. September 2020 IW-Konjunkturprognose: The Long Road to Recovery

In the second quarter of 2020 the corona pandemic adversely affected global economic activity to an extent unparalleled in the last seven decades. This was the result of health policy measures and the virus’s widely varying impact on both the supply and demand sides of the economies it has affected around the world.

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The Long Road to Recovery
IW-Forschungsgruppe Gesamtwirtschaftliche Analysen und Konjunktur / Hubertus Bardt / Markus Demary / Michael Grömling / Tobias Hentze / Michael Hüther / Galina Kolev / Holger Schäfer IW-Report No. 46 14. September 2020

IW-Konjunkturprognose: The Long Road to Recovery

IW-Report

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German Economic Institute (IW) German Economic Institute (IW)

In the second quarter of 2020 the corona pandemic adversely affected global economic activity to an extent unparalleled in the last seven decades. This was the result of health policy measures and the virus’s widely varying impact on both the supply and demand sides of the economies it has affected around the world.

However, the subsequent summer months have seen a pronounced economic recovery in many industrialised countries, and especially in China. If this recovery is not interrupted by a further lockdown, global economic activity and world trade may reach pre-crisis levels towards the end of 2021. A vaccine and the easing of geopolitical tensions would firm up and could even improve this overall positive forecast for 2021.

In Germany, exports, capital expenditure on equipment and private consumption slumped sharply in the second quarter of 2020. These aggregates will not have returned to last year’s level by the end of 2021. On the other hand, public sector consumption and the construction industry are providing a positive impetus. In 2020 real GDP in Germany will have declined by 6 ¼ per cent against previous year, while growth of just under 4 ½ per cent is forecast for 2021. The inflation rate will fall to ½ per cent in 2020 while 2021’s consumer prices will be 1 ½ per cent higher than this year’s. The average number of people in work in Germany will fall by ¾ per cent in 2020 but will edge up slightly in 2021. Next year, an annual average of just under 45 million will be in employment, with the number of jobless a little over 2.7 million, corresponding to an unemployment rate of around 6 per cent. The public sector deficit will rise to 200 billion euros this year, around 6 per cent of GDP, with an expected deficit for 2021 of just under 4 per cent. Germany’s public debt ratio will be some 75 per cent of GDP in both years.
 

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The Long Road to Recovery
IW-Forschungsgruppe Gesamtwirtschaftliche Analysen und Konjunktur / Hubertus Bardt / Markus Demary / Michael Grömling / Tobias Hentze / Michael Hüther / Galina Kolev / Holger Schäfer IW-Report No. 46 14. September 2020

IW-Forschungsgruppe Gesamtwirtschaftliche Analysen und Konjunktur / Hubertus Bardt / Markus Demary / Michael Grömling / Tobias Hentze / Michael Hüther / Galina Kolev / Holger Schäfer: Weite Wege der Erholung – IW-Konjunkturprognose Herbst 2020

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German Economic Institute (IW) German Economic Institute (IW)

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The Productivity Effects of Capital Formation in Germany
Michael Grömling IW-Trends No. 2 9. May 2022

The Productivity Effects of Capital Formation in Germany

Despite broad-based digitalisation, productivity advances in Germany in recent years have been considerably lower than in previous decades. This paper conducts a growth accounting which points to steeply declining stimuli from technical progress and especially ...

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Jürgen Matthes IW-Policy Paper No. 1 25. February 2022

Stability instead of government overreach

Contrary to what the German government seems to be aiming for, a reform of the Stability and Growth Pact (SGP) is necessary. The debt reduction rule forces highly indebted euro countries to reduce their debt too quickly and too damagingly for growth.

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