Europe’s leading economy, Germany, is bracing for a painful fallout from the coronavirus crisis that is likely to result in the country’s deepest recession in the post-war era.
After a decade of growth, the German economy is likely to shrink by 6.3 percent in 2020, according to Economy Ministry projections released on Wednesday. The outlook is a little brighter than figures announced by the International Monetary Fund (IMF) earlier this month, as the lender expects a seven percent contraction in Germany next year.
After passing the lowest point of the recession in the second quarter, economic activity is expected to pick up in the second half of the year and the gross domestic product (GDP) may jump by 5.2 percent in 2021. The crisis has already cost the German government $1.1 trillion as it introduced “unprecedented” measures to keep the economy afloat as coronavirus-related restrictions led to massive closures of businesses.
“We are faced with great challenges, both economic and political,” Peter Altmaier, Germany’s economy minister, said. Despite the devastating impact of the virus on the economy, the minister stressed the country shouldn’t rush to lift restrictions on public life due to a possible resurgence of the disease. The warning comes amid fears over rising infection rate across the country, meaning that the spread of the deadly virus is accelerating again.
Earlier in the day, the European Commission released the results of a survey, showing that the key indicator for economic sentiment in both the euro area and the European Union dramatically plummeted in April. The decline became the worst on record (since 1985), surpassing the negative March results.
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