German government economic advisers have said they expect the breakthrough Covid-19 vaccine developed by Pfizer and BioNTech to boost the German economy, while warning that the coronavirus crisis is not over.
Lars Feld, chairman of the German Council of Economic Experts, said the vaccine would trigger a positive mood among German companies which could translate into increased business activity in 2021.
“If we have an effective serum and many people get vaccinated, then with the better outlook and the confidence it brings, we will have clear expected effects that will take effect next year.”
He said the council forecast 3.7% growth next year, but the potential rebound in confidence that an effective vaccine could provoke “means things could get better than expected.”
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But he also warned that the economic recovery remained fragile in light of the recent surge in coronavirus cases, which prompted Angela Merkel’s government to reimpose a “lockdown-light” on theaters, bars and restaurants. “Further developments depend on how the pandemic can be contained and how other economies overseas fare.”
Mr Feld was speaking two days after Pfizer and BioNTech released the results of trials which showed the Covid-19 vaccine they had developed to be over 90% effective. It will likely be the first of several potential vaccines in development to receive regulatory approval. BioNTech executives said approval could come in a few weeks.
The council painted a less gloomy picture of the state of the German economy than it did earlier in the year, forecasting a 5.1% decline in gross domestic product in 2020 – well below the 6.5% contraction he predicted in June – thanks to a strong summer.
This would mean that the blow to the German economy from the pandemic would be slightly less than the damage inflicted by the global financial crisis in 2009, when the economy shrank 5.6%.
Merkel’s government welcomed the new forecast, saying it justified the decision to inject billions of euros into the economy during the first lockdown in the spring and thus avert collapse. “The advisers say we were right: the decisive aid policy is paying off,” said Olaf Scholz, German finance minister.
The council said it had taken into consideration the recent sharp rise in coronavirus cases, and the fact that restaurants, bars, gyms, theaters and concert halls had been closed for the month of November, and strict upper limits imposed on all social gatherings.
Advisors’ growth forecast of 3.7% in 2021 was down from a previous estimate – made in June – of 4.9%, but they warned it could be lower if Germany imposed another lockdown at the scale of the spring of 2020.