Updated September 22, 2020
Germany’s economy is expected to shrink 5.2% this year and grow 5.1% next year
- The number of unemployed people is expected to rise to 2.7 million this year, from 2.3 million in 2019
- The Ifo institute has warned there is an unusually high degree of uncertainty attached to the forecast
BERLIN (Reuters) – Germany’s Ifo institute said on Tuesday that Europe’s biggest economy is likely to contract 5.2% this year, upping its previous estimate of a 6.7% drop, the latest sign that damage from the COVID-19 pandemic may be less than initially feared.
“The decline in the second quarter and the recovery are currently developing more favorably than expected,” said Ifo chief economist Timo Wollmershaeuser.
For 2021, Ifo has cut its economic forecast for Germany to 5.1% growth from its previous estimate of 6.4%. He expects the economy to grow 1.7% in 2022.
The number of unemployed people is expected to rise to 2.7 million this year, from 2.3 million in 2019, before falling to 2.6 million in 2021 and then to 2.5 million in 2022.
This would translate into an increase in the unemployment rate to 5.9% this year, from 5.0% last year. The rate would then fall to 5.7% in 2021 and 5.5% in 2022, Ifo said.
The Ifo institute warned that there was an unusually high degree of uncertainty attached to the forecast. He pointed to the rising number of coronavirus infections, the risk of a disorderly Brexit and unresolved trade disputes.