In their joint autumn report the five leading German economic research institutes have corrected their forecast downward. According to the experts’ calculations, the German Gross Domestic Product will shrink by 5.4 percent in 2020. Previously they had predicted a decline of 4.2 percent. This 5.4 percent are at the lower end of the range from five to eight, published by ConMoto already in our blog beginning of April. According to the institutes they had to revise the original forecast because the recovery after the sharp down is slower than initially expected. In 2021 they see economic growth now at 4.7 percent instead of 5.8 percent.
The recession affects the economic sectors differently. Particularly the catering industry and business-related services suffer severely, as reported by ConMoto this six months ago. The insolvencies in restaurants, pubs and other catering businesses could be 25 to 30 percent of all businesses in that industry, also business-oriented services could shrink by 12 percent or more. These scenarios based on a ConMoto survey conducted in April are still realistic.
In their report the economic research institutes clearly show that the further economic development strongly depends on the course of the pandemic. In other words the economy can only recover if people adhere to the protective measures and restrictions which are being tightened again right now: distance, hygiene and the avoidance of parties and other events in large groups.
Only if this is the case, the restrictions could be reduced in spring and summer 2021 allowing the economy to pick up speed. According to the forecast economic output in 2021 will increase by 2.5 percent below the level achieved without a pandemic, a normal output of the economy is expected for the end of 2022.
