Die wirtschaftliche Entwicklung im Inland: Corona-Pandemie verhindert weiterhin die Normalisierung der Produktion
The German economy is recovering from a deep slump caused by the Covid-19 shutdown that lasted from mid-March to mid-May. In the second quarter, GDP fell by 9.7% compared to the previous quarter. Almost all components of demand contrib-uted to this decline. Only government consumption and construction investments expanded in the second quarter. The pace of the recovery depends on how quickly the consequences of the shutdown can be overcome and to what extent the re-strictions in place continue to have an impact on certain sectors of the economy. The economic development in Germany will crucially depend on the course of the Covid-19 pandemic. We assume that the number of infections will rise in winter resulting in renewed restrictions on economic activity at the local level with negative implications for economic growth. We expect these negative effects to diminish in spring. A sustained increase in economic activity, however, will only occur if infec-tion rates are significantly reduced, e.g. through a vaccine or the mass use of rapid test kits. We expect GDP to decline by 4.7% this year, an upward revision of 1.1 percentage points compared to our June forecast. The main reason for the upward revision is that the economic downturn in the second quarter was less severe than we originally anticipated. However, we now also expect a slightly weaker recovery in the second half of the year. According to our forecast, the normalization of economic activity continues in the next year. We expect GDP to increase by 4.5% in 2021, which implies that the economy returns to pre-crisis activity levels only at end of 2021. In 2022, GDP will increase by 2.3% compared to 2021, which is partly driven by the robust recovery at the end of 2021. We expect quarterly growth rates in 2022 to only slightly exceed the growth potential of the German economy. The labor market is likely to remain tense for the time being. The unemployment rate, which rose to 5.4% in the first half of 2020, is likely to rise further in the second half of the year. One reason for the expected increase is that the number of insolven-cies caused by the crisis will grow towards the end of the year. The labor market is expected to slowly recover over the following two years. Fiscal policy is likely to remain expansionary in the coming year resulting in fiscal deficits throughout the entire forecast period. This means that the debt ratio will probably rise to over 70% in 2020. In the following years, it will fall due to the lower negative financial balance and the rapid recovery of the overall economy. In 2022, the debt ratio is expected to be below 70% again.
Schmidt, T., G. Barabas, B. Blagov, N. Isaak, R. Jessen, P. Jäger, M. Micheli and P. Schacht (2020), Die wirtschaftliche Entwicklung im Inland: Corona-Pandemie verhindert weiterhin die Normalisierung der Produktion. RWI Konjunkturberichte, 71, 3, 37-71