How exactly will the German economy recover from the corona crisis in the second half of the year? The ifo Institute provides its latest forecast. After economic output fell by 2.2 % in the first quarter and 11.9 % in the second quarter, growth is expected to be 6.9 % in the third quarter and 3.8 % in the fourth quarter. From now on, things will gradually pick up again, according to ifo.
A normal pullback effect can easily explain a recovery. Production is made up for that which was previously lost. So this time as well? Ifo says that the expected strong growth rates in the second half of the year are explained by the low production of goods and services during the closure of the economy. In the meantime, this has been eased or eliminated for some sectors of the economy. So, the pure catch-up effect will provide the upward push from now on? Overall, however, economic output will shrink by 6.7 percent this year compared to 2019, and growth of 6.4 percent is expected next year. This means that the economic output of the end of 2019 will be reached again at the end of 2021, according to ifo. The Munich-based institute is currently also providing concrete forecasts for the employment market, consumption, exports and public finances.
The annual average number of unemployed will rise from 2.3 million to 2.7 million. Next year, however, it will fall to 2.6 million. This means that the unemployment rate will rise from 5.0 to 5.9 percent, only to fall to 5.6 percent in 2021. According to calculations by the ifo Institute, the number of short-time workers fell from May to June 2020 from 7.3 million to 6.7 million. The average number of employees will fall from 45.2 million to 44.8 million this year. It will rise again slightly next year to 44.9 million.
Private consumption is expected to decline by 6.4 percent this year. Investments in equipment and software will even fall by 19.9 percent.
The traces of the corona crisis will be clearly visible in the national budget. The balance of income and expenditure will slip from plus 50.4 billion Euros last year to minus 175.8 this year. In addition to the economic slump, this is mainly due to the corona aid package and the economic stimulus package. That alone cost over 160 billion Euros. Next year the national budget will remain in the red with minus 76.5 billion Euros.
German exports are expected to fall by 13.3 percent in 2020, imports by 7.7 percent. As a result, the internationally criticized surplus of the current account (trade, services and transfers) will shrink from 245.2 billion Euros to 176.2 billion Euros. That means from 7.1 percent of economic output to 5.4 percent. But next year exports will grow again by 13.4 percent and imports by 7.8 percent. This will increase the current account surplus to 268.7 billion or 7.6 percent.