The Ifo Institute lowered its forecast for economic growth in Germany next year to 4.2% from its previous expectations of 5.1%, but raised its outlook on 2022 growth.
The research institute now expects growth of 2.5% in 2022, against an earlier forecast of 1.7%, he said on Wednesday.
“Recent closures in Germany and other countries are delaying the recovery. Production of goods and services will not reach pre-crisis levels until the end of 2021,” said Timo Wollmershaeuser, head of forecasts at I fo.
The current year is expected to end with a further decline in gross domestic product due to coronavirus lockdown measures, Mr Wollmershaeuser said. Overall, the Ifo Institute expects German economic output to decline 5.1% in 2020 compared to the previous forecast of a 5.2% contraction.
Ifo’s forecast is based on the assumption that restrictions in effect since November will remain in effect until March 2021. Current infection control measures will then be gradually relaxed from April and completely abolished by the end of April. ‘summer, Ifo said.
The forecast did not take into account the German government’s decision on Sunday to shut down parts of the retail sector. The closure of non-food retail stores between December 16 and January 10 will intensify the economic crisis at the end of this year, Ifo said. âIt is important to note that December is the month with the highest sales in the retail sector, accounting for almost 10% of annual sales,â said Ifo.
According to estimates by the Ifo Institute, the loss of added value linked to the partial closure of the retail business will be 1.15 billion euros (1.4 billion dollars) in the fourth quarter and 550 million euros in the first quarter and that would worsen the decline in GDP. in the fourth quarter by 0.15 percentage points while adding 0.08 and 0.07 percentage points to GDP growth in the first and second quarters of 2021, respectively.
The unemployment rate is expected to drop from 5.0% in 2019 to 5.9% in 2020 and then remain stable next year. For 2022, the Ifo Institute expects the figure to drop to 5.5%.
After falling 9.7% in 2020, exports are expected to grow 8.8% next year and 6.1% in 2022, according to Ifo forecasts.
Meanwhile, imports will increase 6.8% in 2021 and 7.1% in 2022, after suffering an 8.7% drop this year, he said.
âThis means that the much-criticized current account surplus will grow from â¬ 235.2 billion in 2020 to â¬ 281.1 billion in 2022,â Ifo said.
Write to Maria Martinez at [email protected]