German authorities have revised their GDP estimates for the current financial year, conceding that the country’s output would shrink by 6.5 per cent in 2020 as the fallout of the COVID-19 pandemic has turned out to be worse than expected.
In March,German economists expected coronavirus-induced lockdowns to last not more than five weeks. On Tuesday, however they had to drastically decrease their former growth forecast for the current year.
Back in March, Deutsche Welle had reported Germany’s panel of economic advisers predicting a 2.8% drop in Gross Domestic Product for 2020 due to the pandemic. This estimate was based on the assumption that lock down would last for about five weeks after which there would be a swift recovery in economic activities. However things did not go as expected as some restrictions are still in place today that keeps weighing heavily on the economy.
German economists concede that the country’s output would shrink by 6.5% in 2020, plunging the country into its worst recession since the end of World War II. Today the industrial production of Germany, the largest economy of Europe has already decreased to its lowest level in two decades and export statistics for May also contracted drastically highlighting Germany’s heavy dependence on other European markets and exports in general. Experts predict German shipments abroad to dip by 14.5% this year. Experts believe that recovery is likely to take a long time maybe reach into 2022, especially because some of Germany’s crucial export markets have been hit hard by the pandemic reducing demand. They also expect poor investor sentiment for a while as long as exports are down and the firms’ equity capital remain low.