IDEAS home Printed from https://ideas.repec.org/a/diw/diwdwr/dwr10-37-3.html
   My bibliography  Save this article

German Economy: On the Long, Slow Road to Normality: DIW Economic Outlook

Author

Listed:
  • Claus Michelsen
  • Marius Clemens
  • Max Hanisch
  • Simon Junker
  • Konstantin A. Kholodilin
  • Laura Pagenhardt

Abstract

The German economy has bottomed out, but its recovery is going to be long and arduous. Nevertheless, following the almost two-digit slump in economic output in the second quarter of 2020, recovery is likely to be accompanied by above-average rates. However, it is assumed that a second wave will not occur and lockdown-like measures will not be reimplemented. Private consumption in particular will markedly increase over the third and fourth quarters of 2020. Short-time work is declining, contributing to the increase in disposable income. Additionally, households saved considerably during the height of the pandemic in spring 2020 and are spending their savings gradually over the second half of the year. The VAT reduction and further stimulus program measures are supporting consumption and thus the economy. In contrast, the recovery in foreign demand for German products is likely to be more protracted. The economy and labor markets in many countries have been hit much harder than in Germany, and demand for consumer durables and capital goods – the focus of Germany’s export industry – in particular is likely to be subdued. The pre-crisis level of economic activity will likely not be reached until early 2022. In 2020, German GDP is expected to drop by an annual average of 6.0 percent and grow by 4.1 and 3.0 percent in 2021 and 2022, respectively.

Suggested Citation

  • Claus Michelsen & Marius Clemens & Max Hanisch & Simon Junker & Konstantin A. Kholodilin & Laura Pagenhardt, 2020. "German Economy: On the Long, Slow Road to Normality: DIW Economic Outlook," DIW Weekly Report, DIW Berlin, German Institute for Economic Research, vol. 10(37), pages 394-397.
  • Handle: RePEc:diw:diwdwr:dwr10-37-3
    as

    Download full text from publisher

    File URL: https://www.diw.de/documents/publikationen/73/diw_01.c.799020.de/dwr-20-37-3.pdf
    Download Restriction: no
    ---><---

    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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:diw:diwdwr:dwr10-37-3. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/diwbede.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Bibliothek (email available below). General contact details of provider: https://edirc.repec.org/data/diwbede.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.