The German council of economic advisors give their take on the coronavirus outbreak situation and the economic fallout related
- Virus outbreak has put an end to the incipient economic recovery
- Recession in 1H 2020 is unavoidable
- German economy will shrink significantly this year
- Baseline scenario is economy to shrink by 2.8% this year and grow by 3.7% in 2021
- Baseline scenario is for economic situation to normalise over the summer
- Second scenario involves a V-shaped trajectory with widespread production halts
- That will see the economy shrink by 5.4% this year and grow by 4.9% in 2021
- Third scenario involves a U-shaped trajectory where recovery begins next year
- That will see the economy shrink by 4.5% this year and grow by 1.0% in 2021
Until we get a medical breakthrough to calm the fears of the public, any major recovery may be put on hold because of the imminent and necessary changes to social behaviour and socioeconomic conditions across the globe.
The fact that the forecast here includes multiple scenarios should tell us that nobody really knows what to expect, except for the fact that there is still more uncertainty to follow.
