[Asia Economy Reporter Naju-seok] The German economy is expected to experience negative growth in the second quarter of this year due to the impact of the novel coronavirus infection (COVID-19).
On the 8th (local time), German private economic research institutes forecast that the German economy will shrink by -9.8% in the second quarter of this year. This represents the largest economic contraction since 1970, and is twice the shock experienced during the 2009 global financial crisis.
The German private economic research institutes anticipate that economic activity will contract due to lockdown policies and other measures to contain the spread of COVID-19. They also expect the economy to shrink by -1.9% in the first quarter of this year.
They predict that after negative growth this year, the German economy will rebound sharply next year. The forecast is for -4.2% growth this year followed by 5.8% growth next year.
These institutions believe that Germany’s fiscal capacity will absorb the economic shock and support a recovery trend. They stated, "Germany will be able to respond to the recession without sliding into a crisis."
However, they also see significant downward pressure. They warned, "Financial system paralysis due to corporate defaults and other factors is expected," and urged, "The government must prepare for such situations."
Meanwhile, they expect that this crisis will result in 236,000 job losses in Germany, raising the unemployment rate to 5.5%. Foreign media explained that this employment situation is better than that of other Eurozone countries (countries using the euro).
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
