The German council of economic advisors offered their take on the economic fallout from the coronavirus outbreak and warned of the deepest recession since 2009.
Key points:
- The virus outbreak has put an end to the incipient economic recovery.
- Recession in 1H 2020 is unavoidable.
- The German economy will shrink significantly this year.
- The baseline scenario is the economy to shrink by 2.8% this year and grow by 3.7% in 2021.
- The baseline scenario is for the economic situation to normalise over the summer.
- The 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.
- The 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.
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