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Three possible scenarios for German GDP amid COVID-19
03-04-2020 16:13
Three possible scenarios for German GDP amid COVID-19
Three possible scenarios for German GDP amid COVID-19

Amid the intensifying coronavirus pandemic, the German economy is trying to adequately respond to the challenges provoked by the current negative situation. According to the German Council of Economic Experts, the country's gross domestic product will suffer the most in 2020. They predict that COVID-19 can plunge the European largest economy into recession.

The experts analyzed the potential economic fallout from the coronavirus pandemic on the basis of three different scenarios. The basic risk scenario assumes a short period of restrictive measures introduced in the country, meaning that the economic situation could normalize over the summer. In this case, GDP is expected to drop by only 2.8%. In 2021, the economy can recover by 3.7%, analysts say.

The second scenario seems less optimistic. It involves widespread halts to production and longer-lasting restrictive measures. The experts are confident that in such a situation, Germany's GDP is likely to contract by 5.4%. As a result, the country will go into the red this year.

According to the third scenario, the current lockdown will continue until the end of the summer, while a complete workplace shutdown is still in question. The Council of Economic Experts points up a deterioration in financial conditions and ongoing uncertainty in the near future. Against this background, consumption and investment spending will decline, experts are sure. In such a case, in 2020, the German economy will most likely shrink by 4.5%.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

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