Forex News

Ifo: German economy to shrink by more than 6% in 2020

Ifo: German economy to shrink by more than 6% in 2020

The German Economic Institute Ifo expected on Tuesday that the German economy will experience a strong contraction this year due to the restrictions imposed to contain the corona crisis.

The largest economy in the euro area will probably shoring by 6.6 percent in 2020 overall, and the GDP will not return to pre-pandemic levels until the end of 2021.

In the first quarter of this year, the economy contracted 1.9 percent, where the pace of contraction in the second quarter will widen to 12.2 percent, according to the data of companies in Germany.

The institute also announced that the situation has become almost impossible to anticipate the return of the German economy to the pre-pandemic performance, as this necessarily means that Germany will have to expand by 8.5 percent during 2021.

The German IFO Institute also added that climate data for business last week collapsed during April, the largest ever decline, as the Corona virus pandemic sent the largest economy in the European Union into a deep recession.

On the other hand, the Corona virus and closure measures had a role in disrupting the export strength of Germany, which German factories were overwhelmed, in addition to the fact that the lockdowns had severely reduced consumer spending.

It should be noted that the German government had provided incentives worth 750 billion euros in order to reduce the economic damage caused by the Corona virus on the pivotal sectors of the German economy.

However, Chancellor Angela Merkel is concerned that Germans are softening their far-reaching social efforts and resisting pressure from some countries to move forward with easing restrictions.

As of 10:43 GMT, the euro traded higher for a third straight session versus the U.S. dollar at 1.0878, resuming its rebound attempts after falling to its lowest level since March 24 last Friday.

Share Article