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Coronavirus Plunges the German Economy into Recession: DIW Economic Outlook

Author

Listed:
  • Claus Michelsen
  • Marius Clemens
  • Max Hanisch
  • Simon Junker
  • Konstantin A. Kholodilin
  • Thore Schlaak

Abstract

The spread of the coronavirus worldwide is exerting considerable pressure on the economy. Compounded by the lack of quality data, model uncertainty, and uncertainty over government responses, economic forecasts are subject to even greater uncertainty than usual. It is difficult to predict how the pandemic will progress. Figures on the impact of the virus, obtained by comparing it with previous epidemics, for example, provide rough approximations at best. Based on the model calculations, Germany can expect to suffer huge economic losses. Given the information available, it is reasonable to assume that economic output will actually be one percentage point lower than recently projected in the winter outlook. As a result, GDP will decline by 0.1 percent this year. If the higher number of working days this year is factored in, in line with general international practice, economic output will fall by as much as 0.5 percent. The corona pandemic will plunge Germany into recession, albeit the exact size of the downturn remains unclear.

Suggested Citation

  • Claus Michelsen & Marius Clemens & Max Hanisch & Simon Junker & Konstantin A. Kholodilin & Thore Schlaak, 2020. "Coronavirus Plunges the German Economy into Recession: DIW Economic Outlook," DIW Weekly Report, DIW Berlin, German Institute for Economic Research, vol. 10(12), pages 184-190.
  • Handle: RePEc:diw:diwdwr:dwr10-12-3
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    More about this item

    Keywords

    Business cycle forecast; ecoomic outlook;

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E66 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General Outlook and Conditions
    • F01 - International Economics - - General - - - Global Outlook

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